SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q

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

 For the quarterly period ended July 31, 2000
                                -------------

 Commission file number 0-11254
                        -------

                                 COPYTELE, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


        Delaware                                        11-2622630
        --------                                        ----------
(State or other jurisdiction of                      (I.R.S.  employer
 incorporation or organization)                     identification    no.)


900 Walt Whitman Road
     Melville, NY                                         11747
--------------------------------------------------------------------------------
(Address of principal executive offices)               (Zip  Code)

                                 (631) 549-5900
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


     Indicate by check mark  whether the  registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing  requirements  for the past 90 days.


                          Yes X                 No
                             ---                  ---


     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practicable date.

Number of shares of common stock, par value
$.01 per share, outstanding as of September 11, 2000:          63,084,526 shares
                                                               -----------------


                                       1
<PAGE>
                               TABLE OF CONTENTS
                               -----------------


Part I.   FINANCIAL  INFORMATION

Item 1.   Financial Statements

          Condensed  Balance Sheets as of July 31, 2000  (Unaudited) and October
          31, 1999

          Condensed  Statements  of  Operations  (Unaudited)for  the nine months
          ended July 31, 2000 and 1999, and for the period from November 5, 1982
          (Inception) through July 31, 2000

          Condensed  Statements of Operations  (Unaudited)  for the three months
          ended July 31, 2000 and 1999

          Condensed Statement of Shareholders' Equity (Unaudited) for the period
          from November 5, 1982 (Inception) through July 31, 2000

          Condensed  Statements  of Cash Flows  (Unaudited)  for the nine months
          ended July 31, 2000 and 1999, and for the period from November 5, 1982
          (Inception) through July 31, 2000

          Notes to Condensed Financial Statements (Unaudited)

Item 2.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations

Part II.  OTHER INFORMATION

Item 2.   Changes in Securities and Use of Proceeds

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

Item 6.   Exhibits and Reports on Form 8-K

          Signatures




                                       2
<PAGE>


                         Part I - FINANCIAL INFORMATION
                                  ---------------------

Item 1.  Financial  Statements
         ---------------------
<TABLE>
<CAPTION>
                                  COPYTELE,INC.
                                  -------------
                         (Development Stage Enterprise)
                         ------------------------------
                            CONDENSED BALANCE SHEETS
                            ------------------------

                                                                                     Unaudited
                                                                                      July 31,        October 31,
                              ASSETS                                                    2000              1999
                              ------                                                 ---------         -----------
<S>                                                                                 <C>                 <C>
CURRENT ASSETS:
  Cash (including cash equivalents and interest bearing accounts of
    $2,596,735 and $1,531,254, respectively)                                         $2,620,721         $1,587,830
  Marketable securities, at cost                                                         96,873            488,038
  Accounts receivable (net of allowance for doubtful accounts)                          477,773             23,115
  Inventory                                                                           4,868,280          4,538,608
  Prepaid expenses and other current assets (including amounts due from
    Joint Venture of approximately $862,000)                                            888,346            905,984
                                                                                      ---------          ---------
                      Total current assets                                            8,951,993          7,543,575


PROPERTY AND EQUIPMENT, net                                                             325,073            531,155

OTHER ASSETS                                                                             25,091             26,814

DEFERRED TAX BENEFITS (net of valuation allowance of
  $35,100,000 and $33,026,000, respectively)                                               -                  -
                                                                                     ----------        -----------
                                                                                     $9,302,157         $8,101,544
                                                                                     ==========        ===========
               LIABILITIES AND SHAREHOLDERS'EQUITY
               -----------------------------------

CURRENT LIABILITIES:
  Accounts payable (including amounts due to Joint Venture of
    approximately $862,000)                                                          $2,166,853         $1,546,494
  Accrued liabilities                                                                   168,437            270,273
                                                                                      ---------          ---------
                      Total current liabilities                                       2,335,290          1,816,767


SHAREHOLDERS' EQUITY:
  Preferred stock, par value $100 per share; authorized 500,000 shares;
    no shares outstanding                                                                  -                 -
  Common stock, par value $.01 per share; authorized 240,000,000
    shares; outstanding 63,084,526 and 60,057,376 shares, respectively                  630,845            600,574
  Additional paid-in capital                                                         60,050,852         55,844,128
  Accumulated (deficit) during development stage                                    (53,714,830)       (50,159,925)
                                                                                    -----------         -----------
                                                                                      6,966,867          6,284,777
                                                                                    -----------         -----------
                                                                                     $9,302,157         $8,101,544
                                                                                    ===========         ===========
 </TABLE>
The accompanying notes to condensed financial statements are an integral part of
these balance sheets.

                                       3


<PAGE>
<TABLE>
<CAPTION>

                                 COPYTELE, INC.
                                 --------------
                         (Development Stage Enterprise)
                         ------------------------------
                 CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
                 ----------------------------------------------



                                                                          For the nine months                    For the period from
                                                                             ended July 31,                       November 5, 1982
                                                            ------------------------------------------------     (Inception) through
                                                                     2000                      1999                  July 31, 2000
                                                            ---------------------     ----------------------   --------------------

<S>                                                         <C>                        <C>                       <C>
SALES                                                             $1,190,588                 $  -                    $1,237,465

COST OF SALES                                                       616,977                     -                       654,281
                                                            --------------------     ----------------------   --------------------
  Gross profit                                                      573,611                     -                       583,184

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (including
  research and development expenses of approximately
  $1,975,000, $2,203,000 and
  $33,449,000, respectively)                                      4,140,806                  4,909,332               58,015,657
                                                            --------------------     ----------------------   ---------------------

LOSS FROM AND IMPAIRMENT OF
  INVESTMENT IN JOINT VENTURE                                        82,040                    142,506                1,307,040
                                                            --------------------     ----------------------   ---------------------

INTEREST INCOME                                                      94,330                    133,127                5,024,683
                                                            --------------------     ----------------------   ---------------------

NET LOSS                                                        $(3,554,905)               $(4,918,711)            $(53,714,830)
                                                            ====================     ======================   =====================

NET LOSS PER SHARE OF COMMON STOCK: Basic and Diluted                $(0.06)                    $(0.08)                  $(1.12)
                                                            ====================     ======================   =====================

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: Basic and
  Diluted                                                        61,984,822                 58,491,880               47,981,532
                                                            ====================     ======================   =====================


</TABLE>
The accompanying notes to condensed financial statements are an integral part of
these statements.



                                       4

<PAGE>
<TABLE>
<CAPTION>

                                 COPYTELE, INC.
                                 --------------
                         (Development Stage Enterprise)
                         ------------------------------
                 CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
                 ----------------------------------------------



                                                                           For the three months
                                                                              ended July 31,
                                                            ------------------------------------------------
                                                                    2000                      1999
                                                            ---------------------     ----------------------

<S>                                                          <C>                       <C>
SALES                                                             $492,196                  $   -

COST OF SALES                                                      225,398                      -
                                                            ---------------------     ----------------------
  Gross profit                                                     266,798                      -

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (including
  research and development expenses of approximately
  $645,000 and $724,000, respectively)                           1,265,006                  1,897,197
                                                            ---------------------     ----------------------

LOSS FROM AND IMPAIRMENT OF INVESTMENT IN
  JOINT VENTURE                                                     18,000                     29,411
                                                            ---------------------     ----------------------

INTEREST INCOME                                                     42,352                     36,352
                                                            ---------------------     ----------------------

NET LOSS                                                         $(973,856)               $(1,890,256)
                                                            =====================     ======================

NET LOSS PER SHARE OF COMMON STOCK: Basic and Diluted               $(0.02)                    $(0.03)
                                                            =====================     ======================

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: Basic
  and Diluted                                                   63,074,654                 59,085,633
                                                            =====================     ======================

</TABLE>

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

                                        5


<PAGE>
<TABLE>
<CAPTION>
                                 COPYTELE, INC.
                                 --------------
                         (Development Stage Enterprise)
                         ------------------------------
                   CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
                   -------------------------------------------
 FOR THE PERIOD FROM NOVEMBER 5, 1982 (INCEPTION) THROUGH JULY 31, 2000 (UNAUDITED)
 -----------------------------------------------------------------------------------

                                                                                                                      Accumulated
                                                                                                    Additional      (Deficit) During
                                                                         Common Stock                 Paid-in          Development
                                                                     Shares      Par Value            Capital            Stage
                                                               --------------------------------    ------------     ----------------
<S>                                                             <C>               <C>               <C>             <C>
BALANCE, November 5, 1982 (Inception)                                  -              $ -              $ -                $ -
Sale of common stock, at par, to incorporators on November
  8, 1982                                                          1,470,000         14,700              -                  -
Sale of common stock, at $.10 per share, primarily to
  officers and employees from November 9, 1982 to November
  30, 1982                                                           390,000          3,900            35,100               -
Sale of common stock, at $2 per share, in private offering
  from  January 24, 1983 to March 28, 1983                           250,000          2,500           497,500               -
Sale of common stock, at $10 per share, in public offering on
  October 6, 1983, net of underwriting discounts of $1 per
  share                                                              690,000          6,900         6,203,100               -
Sale of 60,000 warrants to representative of underwriters, at
  $.001 each, in conjunction with public offering                      -                 -                 60               -
Costs incurred in conjunction with private and public
  offerings                                                            -                 -           (362,030)              -
Common stock issued, at $12 per share, upon exercise of
  57,200 warrants from February 5, 1985 to October 16, 1985,
  net of registration costs                                           57,200            572           630,845               -
Proceeds from sales of common stock by individuals from
  January 29, 1985 to October 4, 1985 under agreements with
  the Company, net of costs incurred by the Company                    -                 -            298,745               -
Restatement as of October 31, 1985 for three-for-one stock
  split                                                            5,714,400         57,144           (57,144)              -
Common stock issued, at $4 per share, upon exercise of 2,800
  warrants in December 1985                                            8,400             84            33,516               -
Sale of common stock, at market, to officers on January 9,
  1987 and April 22, 1987 and to members of their immediate
  families on July 28, 1987                                           67,350            674           861,726               -
Restatement as of July 31, 1987 for five-for-four stock
  split                                                            2,161,735         21,617           (21,617)              -
Fractional share payments in conjunction with five-for-four
  stock split                                                          -                 -             (1,345)              -
Sale of common stock, at market, to members of officers'
  immediate families from September 10,1987 to December 4,
  1990 and to officers on October 29, 1987 and February 26,
  1989                                                               628,040          6,280         6,124,031               -
Sale of common stock, at market, to senior level
  personnel on February 26, 1989                                      29,850            299           499,689               -

                                                                                                                         Continued
</TABLE>
                                       6
<PAGE>
<TABLE>
<CAPTION>



                                 COPYTELE, INC.
                                 --------------
                         (Development Stage Enterprise)
                         ------------------------------
                   CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
                   -------------------------------------------
 FOR THE PERIOD FROM NOVEMBER 5, 1982 (INCEPTION) THROUGH JULY 31, 2000 (UNAUDITED)
 -----------------------------------------------------------------------------------


                                    Continued
                                    ---------


                                                                                                                       Accumulated
                                                                                                    Additional      (Deficit) During
                                                                       Common Stock                   Paid-in          Development
                                                                   Shares       Par  Value            Capital             Stage
                                                               ---------------------------------   ----------------  ---------------
<S>                                                             <C>              <C>              <C>                <C>
Sale of common stock, at market, to unrelated party on
  February 26, 1989 amended on March 10, 1989                         35,820           358             599,627              -
Restatement as of January 31, 1991 for
  two-for-one stock split                                         11,502,795       115,028            (115,028)             -
Sale of common stock, at market, to members of officers'
  immediate families from April 26, 1991 to October 27,
  1992                                                               261,453         2,615            2,788,311             -
Common stock issued upon exercise of warrants by
  members of officers' immediate families on various
  dates from September 1993 through March 1996                       579,800         5,798            2,651,462             -
Common stock issued upon exercise of stock options
  from December 16, 1992 to June 12, 1996                          4,535,340        45,353           28,197,223             -
Restatement as of June 17, 1996 for two-for-one stock
  split                                                           28,382,183       283,822             (283,822)            -
Common stock issued upon exercise of warrants by
  members of officers' immediate families on various
  dates in July and October, 1996, and March 1997                    206,610         2,066            1,062,167             -
Common stock issued upon purchase of equipment                        15,000           150               74,850             -
Common stock issued upon exercise of stock options
  from July 1996 to October 1999 under stock option plans,
  net of registration costs                                        1,771,400        17,714            4,414,412             -
Sale of common stock, at market, to a related party and
  other unrelated parties in April and September, 1999             1,300,000        13,000            1,461,500             -
Stock options granted to consultants                                    -             -                 461,900             -
Common stock issued upon exercise of stock options
  from November 1999 to April 2000 under stock option plans        2,267,400        22,674            3,003,050             -
Sale of common stock, at market, to unrelated parties in
  January and March, net of listing fees                             616,500         6,165              794,420             -
Common stock issued upon exercise of warrants in May 2000            143,250         1,432              198,604
Accumulated (deficit) during development stage                        -                 -                  -           (53,714,830)
                                                               --------------    ------------      -------------     --------------
BALANCE, July 31, 2000                                            63,084,526      $630,845          $60,050,852       $(53,714,830)
                                                               ==============    ============      =============     ==============

</TABLE>

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

                                       7
<PAGE>
<TABLE>
<CAPTION>

                                 COPYTELE, INC.
                                 --------------
                         (Development Stage Enterprise)
                         ------------------------------
                 CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
                 ----------------------------------------------

                                                                               For the nine
                                                                               months ended                      For the period from
                                                                                 July 31,                         November 5, 1982
                                                               ------------------------------------------        (Inception) through
                                                                      2000                      1999                July 31, 2000
                                                               --------------------      -----------------    ----------------------
<S>                                                            <C>                        <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Payments to suppliers, employees and
  consultants                                                    $(4,179,428)               $(4,533,039)              $(59,941,282)
Cash received from customers                                         716,331                      -                        763,208
Interest received                                                    102,299                    132,343                  5,023,134
                                                               --------------------      --------------------    -------------------
Net cash used in operating activities                             (3,360,798)                (4,400,696)               (54,154,940)
                                                               --------------------      --------------------    -------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                                  (23,821)                   (41,767)                (2,047,263)
Disbursements to acquire certificates of deposit and
  marketable securities                                              (96,873)                  (488,038)               (13,630,910)
Proceeds from maturities of investments                              488,038                      -                     13,534,037
Investment made in Joint Venture                                        -                       (71,500)                (1,225,000)
                                                               --------------------      --------------------    -------------------
Net cash provided by (used in) investing activities                  367,344                   (601,305)                (3,369,136)
                                                               --------------------      --------------------    -------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sales of common stock and warrants, net of
  underwriting discounts of $690,000 related to initial
  public offering in October 1983                                       -                         -                     17,647,369
Proceeds from exercise of stock options and warrants, net
  of registration costs                                            3,225,760                   1,345,230                40,286,973
Proceeds from sales of common stock in private placements,
  net of listing fees                                                800,585                    600,000                  2,275,085
Proceeds from sales of common stock by individuals
  under agreements with the Company, net of disbursements
  made by the Company                                                   -                         -                        298,745
Disbursements made in conjunction with sales of stock                   -                         -                       (362,030)
Fractional share payments in conjunction with stock split               -                         -                         (1,345)
                                                               --------------------      --------------------    -------------------
Net cash provided by financing activities                          4,026,345                  1,945,230                 60,144,797
                                                               --------------------      --------------------    -------------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS               1,032,891                 (3,056,771)                 2,620,721

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                   1,587,830                  5,406,017                      -
                                                               --------------------      --------------------    -------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                        $2,620,721                 $2,349,246                 $2,620,721
                                                               ====================      ====================    ===================
                                                                                                                          Continued
</TABLE>


                                       8
<PAGE>
<TABLE>
<CAPTION>
                                 COPYTELE, INC.
                                 --------------
                         (Development Stage Enterprise)
                         ------------------------------
                 CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
                 ----------------------------------------------

                                    Continued
                                    ---------

                                                                          For the nine
                                                                          months ended                         For the period from
                                                                            July 31,                             November 5, 1982
                                                           --------------------------------------------        (Inception) through
                                                                  2000                     1999                   July 31, 2000
                                                           -------------------      -------------------     ------------------------
<S>                                                        <C>                       <C>                     <C>
RECONCILIATION OF NET LOSS TO NET
CASH USED IN OPERATING ACTIVITIES:
Net loss                                                       $(3,554,905)             $(4,918,711)                 $(53,714,830)
Loss from Joint Venture                                               -                     142,506                     1,139,828
Stock option compensation to consultants                           210,650                   61,650                       461,900
Depreciation and amortization                                      199,903                  207,353                     1,842,573
Loss from disposition of assets                                     30,000                     -                           30,000
Impairment of investment in Joint Venture                             -                        -                           85,172
Impairment of amounts due from Joint
  Venture                                                             -                        -                        1,407,461
(Increase) in accounts receivable                                 (454,658)                    -                         (477,773)
(Increase)  in inventory                                          (329,672)                (898,790)                   (4,868,280)
 Decrease (increase) in prepaid expenses and
  other current assets                                              17,638                  159,173                      (888,346)
Decrease (increase) in long term amount due
  from Joint Venture                                                  -                     731,991                    (1,407,461)
Decrease (increase) in other assets                                  1,723                   (5,494)                      (25,091)
Increase in accounts payable and
  accrued liabilities                                              518,523                  119,626                     2,259,907
                                                           -------------------      -------------------     ------------------------
Net cash used in operating activities                          $(3,360,798)             $(4,400,696)                 $(54,154,940)
                                                           ===================      ===================     ========================

</TABLE>

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



                                       9
<PAGE>
                                 COPYTELE, INC.
                                 --------------
                         (Development Stage Enterprise)
                         ------------------------------
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                     ---------------------------------------
                            July 31, 2000 (UNAUDITED)
                            -------------------------

(1) Nature of business and other disclosures:
    -----------------------------------------

    Organization
    ------------

CopyTele,  Inc.  (the  "Company"),  which was  incorporated  on November 5, 1982
(Inception),  is a  development  stage  enterprise  whose  principal  activities
include the development, production and marketing of multi-functional encryption
and  telecommunications  products  under the Cryptele (TM) brand name. The first
encryption  products the Company has produced under the Cryptele (TM) brand name
product line are the USS-900  (Universal  Secure System) and the SCS-700 (Secure
Communication System). The Company has recently introduced its DSS-1000 hardware
encryption  system for digital  applications.  The USS-900 and the  DSS-1000 are
hardware-based  peripheral  digital  encryption systems which are available with
either the Harris Corporation  digital  cryptographic chip the Citadel (TM)CCX -
or "triple  DES"  software to provide  high-grade  information  encryption.  The
SCS-700  combines the USS-900  with a modified  version of the Magicom (R) 2000,
the  Company,s  first  developed  product,  to provide a secure  telephone-based
multi-functional  telecommunications  system incorporating the Company's E-Paper
(TM) flat panel display technology.  The Company is also continuing its research
and  development  activities for additional  encryption  products and flat panel
display  technologies in addition to its ultra-high  resolution charged particle
E-Paper (TM) flat panel display.

Shanghai  CopyTele  Electronics  Co.,  Ltd.  (the "Joint  Venture" or  "Shanghai
CopyTele"),  the  Company's  55% owned joint  venture in  Shanghai,  China,  was
established in 1995 to produce and market the Magicom (R) 2000 for the Company.

    Realizability of Assets
    -----------------------

Management has recorded the Company's  inventory at its current best estimate of
net realizable value, which is based upon the historic and future selling prices
of the  Company's  Magicom (R) 2000 units as packaged  in the  SCS-700,  and the
USS-900. To date, sales of the Company's product have been limited. Accordingly,
there can be no  assurance  that the  Company  will not be  required  to further
reduce the selling price of its inventory  below its current  carrying  value in
order to accomplish the Company's business strategies (Note 4).

In  addition,  the  Company's  advances  to  Shanghai  CopyTele  have funded the
purchase of inventory components to manufacture the Magicom (R) 2000. Due to the
uncertainty of realizing the amounts due from Shanghai CopyTele, the Company has
reserved  for  approximately  $1,407,000  of this  amount  at July 31,  2000 and
October 31, 1999, which is shown net in the accompanying financial statements.



                                       10
<PAGE>

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 121,
"Impairment of Long-Lived  Assets and for Long-Lived  Assets to be Disposed of",
the Company recognized a permanent  impairment charge at October 31, 1999 in the
amount of $85,172 on its previously recorded investment in Joint Venture, due to
the uncertainty of Shanghai CopyTele  generating enough future undiscounted cash
flows to cover the carrying amount of the investment.

The success and  profitability  of the Company's  products will depend upon many
factors,  many of which are beyond the Company's control.  These factors include
the capability of the Company to market its products,  the Company's  continuing
ability to purchase the encryption chip for use in its encryption products,  the
production  capability of the Company and its  suppliers as required,  long-term
product performance and the capability of the Company's dealers and distributors
to  adequately  service the  Company's  products,  the ability of the Company to
maintain an acceptable  pricing  level to its  customers  for its products,  the
ability of  suppliers  to meet the  Company's  requirements  and  schedule,  the
Company's  ability to successfully  develop its new products under  development,
rapidly  changing  consumer   preference,   and  the  possible   development  of
competitive  products  that could  render the  Company's  products  obsolete  or
unmarketable.

    Basis of Presentation
    ---------------------

The  condensed  financial  statements  have been  prepared  in  accordance  with
generally  accepted  accounting  principles  for  interim  financial  reporting.
Accordingly,  they do not include all of the information and footnotes  required
by generally accepted accounting  principles for complete financial  statements.
The information  contained  herein is for the nine and three month periods ended
July 31,  2000 and 1999,  and for the period from  November 5, 1982  (Inception)
through  July  31,  2000.  In  the  opinion  of  the  Company,  all  adjustments
(consisting only of normal recurring adjustments considered necessary for a fair
presentation  of the results of operations  for such periods) have been included
herein.

The results of operations for interim  periods may not  necessarily  reflect the
annual  operations  of the Company.  Reference is made to the audited  financial
statements  and notes thereto  included in the  Company's  Annual Report on Form
10-K for the fiscal year ended October 31, 1999, for more extensive  disclosures
than contained in these condensed financial statements.

    Revenue Recognition
    --------------------

The Company  recognizes  revenue based upon shipment of  non-refundable  product
sales.

    Amounts Due from Joint Venture
    ------------------------------

The amounts due from the Joint Venture of approximately  $862,000 as of July 31,
2000 and October 31, 1999, represents advances for parts inventory,  such as the
flat panel assembly  components,  purchased by the Company on behalf of Shanghai
CopyTele, which are incorporated into the Magicom (R) 2000 product.




                                       11
<PAGE>
(2) Joint Venture:
    -------------

    Investment in Joint Venture
    ---------------------------

Due  to  the  uncertainty  of  realizability  of  its  investment,  the  Company
recognized  a permanent  impairment  charge in fiscal 1999  against the carrying
value of this investment.  The Company is not legally liable for the obligations
of the Joint Venture beyond its initial cash capital contribution of $1,225,000.
Therefore,  the Company has discontinued recording its share of any of the Joint
Venture's losses since October 31, 1999.  Should the Joint Venture  subsequently
report income,  the Company will begin accruing income only after the cumulative
income exceeds the  unrecorded  losses and original  investment.  Any additional
investments in Shanghai CopyTele by the Company will be directly expensed to the
statement of operations.

The  Company  controls  four of seven  votes  of the  Joint  Venture's  board of
directors.  However,  decisions  involving  the Joint Venture  require  either a
unanimous or two-thirds vote of the Joint  Venture's  board of directors.  Since
the Company has significant  influence over the Joint  Venture's  operations but
does not have control, the Company has historically  reflected its investment in
the Joint Venture under the equity method of accounting.

The Company has  contributed  an  aggregate  of  $1,225,000  in cash to Shanghai
CopyTele,  and technology that has been valued for purposes of the Joint Venture
at $700,000. Shanghai CopyTele does not reflect the $700,000 in technology as an
asset or equity investment in their financial  statements.  The other parties to
the Joint  Venture  have  contributed  cash  aggregating  $1,575,000.

Condensed  Statements  of  Operations  for Shanghai  CopyTele for the nine month
periods ended July 31, 2000 and 1999 are as follows:

<TABLE>
<CAPTION>                                                               Condensed  Statements  of  Operations
                                                                                     (Unaudited)
                                                                        For the nine months ended July 31,
                                                                        --------------------------------------
                                                                              2000                     1999
                                                                        -----------------       --------------
                       <S>                                             <C>                     <C>
                        Net Sales                                          $    -                    $ -
                        Operating Loss                                      (142,514)               (201,203)
                        Other Expense, net                                   (59,735)                (57,897)
                                                                        -----------------       --------------
                                Net Loss                                   $(202,249)              $(259,100)
                                                                        =================       ==============
</TABLE>
The  cumulative  net loss incurred by Shanghai  CopyTele  since its inception on
April 10, 1995 is $2,274,663.


Two short term loans from a Chinese bank totaling approximately $990,000 matured
on July 20, 2000. The bank has agreed to extend these loans until November 2000.
The loans are  secured by a land-use  contract  and  building  owned by Shanghai
CopyTele.



                                       12
<PAGE>
(3) Shareholders' Equity:
    ---------------------

    Stock option  plans:
    --------------------

The Company has three stock option plans, the 1987 Stock Option Plan, adopted by
the Board of Directors on April 1, 1987 (the "1987 Plan"),  the  CopyTele,  Inc.
1993 Stock Option Plan, adopted by the Board of Directors on April 28, 1993, and
amended on May 3, 1995 and May 10, 1996 (the "1993 Plan") and the CopyTele, Inc.
2000 Share  Incentive Plan adopted by the Board of Directors on May 8, 2000. The
1987 Plan and the 1993 Plan have been  terminated  other  than with  respect  to
outstanding  stock  options  thereunder.  All the  plans  were  approved  by the
Company's stockholders.

SFAS No. 123,  "Accounting for Stock Based Compensation",  encourages,  but does
not require,  companies to record  compensation  cost for  stock-based  employee
compensation  plans at fair value. The Company has chosen to continue to account
for  stock-based   employee   compensation  using  the  intrinsic  value  method
prescribed in Accounting  Principles  Board Opinion ("APB") No. 25,  "Accounting
for Stock Issued to Employees",  and related interpretations.  Compensation cost
for stock options is measured as the excess,  if any, of the quoted market price
of the Company's stock at the date of grant over the amount an employee must pay
to acquire the stock.  In  accordance  with APB Opinion No. 25, no  compensation
cost has been recognized by the Company,  as all option grants to employees have
been made at the fair market value of the Company's stock on the date of grant.

Options  granted  to  non-employee  consultants  are  accounted  for  using  the
fair-value method required by SFAS No. 123.  Compensation  expense recognized in
the nine month  periods  ended July 31, 2000 and 1999 were $210,650 and $61,650,
respectively,  and in the three month  periods ended July 31, 2000 and 1999 were
$76,200 and $0,  respectively,  and are  included in general and  administrative
expenses for the periods.

    Sales of common stock and issuance of warrants:
    -----------------------------------------------

On April 30, 1999,  the Company  sold 400,000  shares of its common stock in two
private  placements at a price of $1.50 per share,  or an aggregate of $600,000,
of which 300,000  shares were sold to an individual who became a director of the
Company in July 1999. In conjunction with the sales of common stock, the Company
issued warrants to purchase  400,000 shares of common stock at an exercise price
of $1.50 per share, which expire on April 30, 2001.

On  September 8, 1999,  the Company  sold 900,000  shares of common stock in six
private  placements at a price of $1.00 per share,  or an aggregate of $900,000,
of which 200,000  shares were sold to a director of the Company.  In conjunction
with the sales of common stock,  the Company issued warrants to purchase 900,000
shares of common stock at an exercise price of $1.00 per share,  which expire on
September 8, 2001.

On January 5, 2000, the Company sold 420,000 shares of common stock in a private
placement  at a price of $0.844 per  share,  or an  aggregate  of  $354,480.  In
conjunction  with the sale of common  stock,  the  Company  issued  warrants  to
purchase  420,000  shares of common  stock at an  exercise  price of $0.844  per
share, which expire on January 5, 2002.



                                       13
<PAGE>
In March 2000,  the Company  sold  196,500  shares of its common  stock in three
private  placements at a price of $2.313 per share, or an aggregate of $454,505.
In conjunction  with the sales of common stock,  the Company issued  warrants to
purchase  196,500  shares of common  stock at an  exercise  price of $2.313  per
share, which expire in March 2002.

In May 2000,  143,250 warrants were exercised for an aggregate purchase price of
$200,037.

As of July 31,  2000,  1,773,250  warrants  to purchase  shares of common  stock
issued and outstanding  were  exercisable.  At July 31, 1999, there were 400,000
outstanding warrants.

  (4) Subsequent Event:
      -----------------

In August 2000, the Company entered into a barter transaction whereby $3,000,000
of certain  inventory was sold in exchange for an equal value of trade  credits.
In accordance with Accounting  Principles Board Opinion No. 29,  "Accounting for
Nonmonetary  Transactions",  the  Company  recognized  no  gain  or  loss on the
transaction  as it is  management's  opinion that this  exchange was effected at
fair market value.  These trade  credits,  which will be recorded as an asset on
the  Balance  Sheet,  may be used to reduce the cost of  advertising  as well as
other products and services.



                                       14
<PAGE>
Item 2. Management's  Discussion  and  Analysis of  Financial
        -----------------------------------------------------
        Condition  and Results of Operations
        ------------------------------------


        Forward-Looking  Statements
        ---------------------------

Information  included  in  this  Quarterly  Report  on  Form  10-Q  may  contain
forward-looking   statements  within  the  meaning  of  the  Private  Securities
Litigation Reform Act of 1995.  Forward-looking statements are not statements of
historical facts, but rather reflect our current expectations  concerning future
events and results. We generally use the words "believes", "expects", "intends",
"plans",  "anticipates",  "likely",  "will", and similar expressions to identify
forward-looking  statements.  These  forward-looking  statements  are subject to
risks and uncertainties and other factors, some of which are beyond our control,
that could cause  actual  results to differ  materially  from those  forecast or
anticipated in the forward-looking  statements.  These risks,  uncertainties and
factors  include,  but are not limited to,  those  factors set forth in "General
Risks and Uncertainties"  below and Note 1 to the Company's Financial Statements
contained in the Company's  Annual Report on Form 10-K for the fiscal year ended
October 31, 1999.

        General
        -------

We have been a  development  stage  company  since our  inception on November 5,
1982. Our principal activities include the development, production and marketing
of the USS-900,  a hardware-based  peripheral digital encryption device, and the
SCS-700,  which combines the USS-900 with a modified Magicom (R) 2000 to provide
a   secure   telephone-based    multi-functional    telecommunications   product
incorporating  our E-Paper (TM) flat panel display  technology.  The Company has
recently introduced its DSS-1000 hardware-based peripheral encryption system for
digital  applications.  We are also  continuing  our  research  and  development
activities for additional  encryption products,  and other ultra-high resolution
flat panel displays, including video and color displays and coated particles. We
cannot assure you, however,  that our efforts in these areas will be successful.
We also  cannot  assure you that we will  generate  significant  revenues in the
future,  that we will have sufficient  revenues to generate profit or that other
products will not be produced by other  companies  that will render our products
obsolete or unmarketable.

The USS-900 and the DSS-1000 are  hardware-based  peripheral  digital encryption
systems  which are available  with either the high grade  strength of the Harris
Corporation  digital  cryptographic  chip the  Citadel(TM) CCX - or "triple DES"
software to provide high-grade information  encryption.  Harris is supplying the
chip at a negotiated  price under a three year  agreement  entered into in 1999.
Triple  DES is an  algorithm  available  in the  public  domain  which  has been
incorporated  into our  software.  Triple  DES is used by many  U.S.  government
agencies.  We are  producing  the USS-900  with the  assistance  of a U.S.-based
sub-contractor.  Shanghai CopyTele has produced the modified Magicom(R) 2000 for
the SCS-700  system.  Shanghai  CopyTele  also supplied us with a portion of the
electronic components, sub-assemblies and accessories for the USS-900.

In reviewing  Management's  Discussion  and Analysis of Financial  Condition and
Results of  Operations,  please refer to our Financial  Statements and the notes
thereto.



                                       15
<PAGE>

    Results of  Operations
    ----------------------

We sell our USS-900 and SCS-700  products to  end-users  directly  and through a
distributor/dealer   network.   We  have  had  limited  sales  to  our  dealers,
distributors  and other customers to support our operations since our inception.
We are hopeful, although there is no assurance, that with an increased marketing
effort for our existing products and our new products under development, we will
procure  sufficient  sales  during  fiscal 2000 to emerge  from the  development
stage.

Sales  for  the  nine  and  three  month   periods  ended  July  31,  2000  were
approximately  $1,191,000 and $492,000,  respectively.  No sales were recognized
for the comparable  periods in fiscal 1999.  Cost of sales and gross profit were
approximately $617,000 and $574,000, respectively for the nine months ended July
31, 2000,  and $225,000 and $267,000,  respectively,  for the three months ended
July 31,  2000,  with no amounts in the  comparable  nine and three month fiscal
1999  periods.  Sales  increased  in the three month  period ended July 31, 2000
primarily as a result of the addition of new distributors.

Selling, general and administrative  expenses,  excluding the loss from Shanghai
CopyTele,  decreased  in the nine  month  fiscal  2000  period by  approximately
$768,000,   from   approximately   $4,909,000  in  the  fiscal  1999  period  to
approximately  $4,141,000  in the fiscal 2000  period.  Included in the selling,
general and administrative expenses are research, development and tooling costs.
The  research  and  development  costs  decreased  in the nine month fiscal 2000
period by approximately  $228,000,  from approximately  $2,203,000 in the fiscal
1999 period to approximately $1,975,000 in the fiscal 2000 period.

There was also a decrease of  approximately  $632,000  in  selling,  general and
administrative  expenses,  excluding the loss from Shanghai  CopyTele,  from the
three month fiscal 1999 period of $1,897,000, to approximately $1,265,000 in the
fiscal 2000 period.  Included in these  expenses are research,  development  and
tooling costs.  The research and  development  costs also decreased in the three
month fiscal 2000 period by approximately  $79,000, from approximately  $724,000
in the fiscal 1999 period to approximately $645,000 in the fiscal 2000 period.

The  decreases in the fiscal 2000 periods as compared to the  comparable  fiscal
1999 periods were  principally  the result of decreases in  compensation  costs,
engineering supplies,  travel, and expenditures for research and development for
video and color flat panel displays. These decreases were offset by increases in
professional  fees,  marketing costs,  stock based  compensation to consultants,
rent and a charge to earnings to bring the  valuation  of inventory in line with
current estimates.


Employee  compensation  and related costs decreased in the aggregate  during the
fiscal 2000  periods as compared to the fiscal  1999  periods  principally  as a
result of certain cost reductions offset in part by an increase in payroll taxes
associated with employee stock option exercises. Decreases in pension costs were
commensurate  with the decreased  compensation  costs.  Other  employee  benefit
programs expenses  remained  approximately the same with reductions in personnel
offset by rate  increases.  Engineering  supplies  decreased  in the fiscal 2000
periods as compared to the comparable fiscal 1999 periods



                                       16
<PAGE>

primarily  as a result of a  reduction  of  component  purchases  to develop the
USS-900 and the video and color flat panel displays.  Engineering  service costs
also decreased in the fiscal 2000 periods as compared to the  comparable  fiscal
1999  periods as a result of  completing  the  development  of the  USS-900  and
reductions in services for Shanghai CopyTele. Research and development costs for
flat panel displays decreased in the aggregate during the fiscal 2000 periods as
compared to the comparable fiscal 1999 periods  principally as a result of lower
costs  incurred  in  connection  with the  development  of our  video  and color
displays. Charges to earnings of approximately $333,000 were recorded during the
nine month fiscal period as compared to $675,000 in the  comparable  fiscal 1999
period  in order to bring  the  valuation  of  inventory  in line  with  current
estimates and for obsolete and spare parts.

Marketing  costs  increased  in the  fiscal  2000  periods  as  compared  to the
comparable fiscal 1999 periods as a result of increased advertising,  trade show
attendance and other promotions for the USS-900 and the SCS-700. However, travel
and entertainment  costs decreased in the fiscal 2000 periods as compared to the
comparable  fiscal 1999  periods due  primarily  to less  international  travel.
Professional  fees were  higher in the fiscal  2000  periods as  compared to the
comparable  fiscal 1999  periods as a result of higher fees  incurred for legal,
accounting and patent-related  services.  Rents also increased during the fiscal
2000  periods as compared to the  comparable  fiscal 1999 periods as a result of
the leasing of additional  storage  space.  Insurance  expense  increased in the
fiscal 2000 periods as a result of higher levels of coverage and the addition of
one policy. Additional advances to Shanghai CopyTele were expensed in the fiscal
2000 periods.  The non-cash  charge to earnings for stock based  compensation to
consultants  was higher in the fiscal 2000 periods as compared to the comparable
fiscal 1999 periods.

Shanghai  CopyTele's  losses for the nine month  periods ended July 31, 2000 and
1999,  and for the period from April 10, 1995  (Shanghai  CopyTele's  Inception)
through July 31, 2000, were approximately  $202,000,  $259,000,  and $2,275,000,
respectively.  The  decrease  in the loss for the nine month  fiscal 2000 period
from the fiscal 1999 period of approximately $57,000 was primarily the result of
further cost  reductions and limited  production  activity with respect to panel
assemblies and Magicom(R)  2000 for the SCS-700  product.  Shanghai  CopyTele is
currently idle but is seeking  products to produce in its facility,  or to lease
or sell the  facility  to a third  party.  A  permanent  impairment  charge  was
recognized  on our  investment  in  Shanghai  CopyTele  in the fiscal year ended
October  31,  1999  due to  the  uncertainty  of  Shanghai  CopyTele  generating
sufficient  future  undiscounted  cash flows to cover the carrying amount of our
investment.

While there is no formal agreement,  our Chairman of the Board and our President
have waived salary and related pension  benefits for an  undetermined  period of
time commencing November 1985. Four other individuals,  including an officer and
three senior level  personnel,  then  employed by us,  waived salary and related
pension  benefits from January 1987 through  December  1990.  While there are no
formal agreements,  commencing January 1991 these individuals waived such rights
for an  undetermined  period of time and they did not receive  salary or related
pension benefits through December 1992. Our Chairman of the Board, our President
and the three senior level personnel  continued to waive such rights  commencing
in  January  1993 for an  undetermined  period of time.  From  February  1993 to
September  1998 one  additional  employee  also  waived  such salary and benefit
rights.



                                       17
<PAGE>
Interest income  decreased  approximately  $39,000 from  approximately  $133,000
during the nine month  fiscal 1999 period as compared to  approximately  $94,000
during  the  nine  month  fiscal  2000   period.   Interest   income   increased
approximately  $6,000 from  approximately  $36,000 during the three month fiscal
1999 period as compared to  approximately  $42,000 during the three month fiscal
2000  period.  The  decrease  in the  nine  month  comparable  periods  resulted
primarily from a decrease in average funds  available for  investment  which was
offset by a slight increase in interest  rates.  The increase in the three month
comparable  periods  resulted  primarily  from  an  increase  in  average  funds
available for investment  aided by a slight  increase in interest  rates.  Funds
available for investment,  on a monthly weighted average basis,  during the nine
month fiscal 2000 and 1999 periods were approximately $2,677,000 and $3,995,000,
respectively,  and $2,943,000  and  $3,194,000,  respectively,  during the three
month fiscal 2000 and 1999 periods.  The investment  instruments  selected by us
are principally money market accounts and treasury investments.


    Liquidity and Capital Resources
    -------------------------------

Since our  inception,  we have met our liquidity and capital  expenditure  needs
primarily  from the proceeds of sales of our common stock in our initial  public
offering, in private placements,  upon exercise of warrants issued in connection
with the private  placements and public  offering and upon the exercise of stock
options pursuant to our 1987 Plan and our 1993 Plan.

During  the  nine  month  period  ended  July 31,  2000,  we  received  proceeds
aggregating  approximately  $716,000 in payments from our customers for products
sold.  For the nine month periods ended July 31, 2000 and 1999, we also received
proceeds aggregating approximately $3,226,000 and $1,345,000, respectively, from
the  exercise  of stock  options and  warrants to purchase  shares of our common
stock.  During the nine month  periods  ended  July 31,  2000 and 1999,  we also
received  proceeds of  approximately  $809,000 and $600,000,  respectively  from
sales of our common stock in private  placements.  Working capital  increased by
approximately  $890,000  from  approximately  $5,727,000  at October 31, 1999 to
approximately  $6,617,000 at July 31, 2000 primarily as a result of the proceeds
received in the fiscal 2000 period offset by the loss incurred.

As of July 31, 2000, our working capital  included  approximately  $2,718,000 of
cash  and  marketable   securities,   and   approximately   $1,473,000  (net  of
approximately $862,000 due to Shanghai CopyTele) of accounts payable and accrued
liabilities.  Our operations  used  approximately  $3,361,000 in cash during the
nine month period ended July 31, 2000. Based on reductions in operating expenses
that  have been  made and  additional  reductions  that may be  implemented,  if
necessary, we believe that our cash resources and cash generated from operations
will be  sufficient to continue  operations  through the third quarter of fiscal
2001. We anticipate  that,  thereafter,  we will continue to require  additional
funds to continue our marketing, and research and development activities if cash
generated from operations is insufficient to satisfy our liquidity requirements.
However,  our  projections  of future  cash needs and cash flows may differ from
actual  results.  If current cash and cash that may be generated from operations
are insufficient to satisfy our liquidity requirements, we may seek to sell debt
or equity  securities  or to  obtain a line of  credit.  The sale of  additional
equity securities or convertible



                                       18
<PAGE>
debt could result in additional dilution to our stockholders. We can give you no
assurance that we will be able to generate adequate funds from operations,  that
funds  will be  available  to us  from  debt or  equity  financings,  or that if
available,  we  will be able  to  obtain  such  funds  on  favorable  terms  and
conditions.  We  currently  have no  definitive  arrangements  with  respect  to
additional financing.

Our estimated  funding  capacity  indicated above assumes,  although there is no
assurance, that the waiver of salary and pension benefits by the Chairman of the
Board, the President and senior level personnel will continue.

We are seeking to improve our liquidity  through an increased  level of sales of
our products.  In an effort to generate  sales, we are marketing the USS-900 and
the DSS-1000 in both the U.S. and  international  markets directly and through a
network of large office equipment  suppliers,  security  product  organizations,
distributors  and dealers.  We are also  increasing our  advertising  program to
include  television  spots in the fall of 2000. We are hopeful,  although we can
give you no assurance,  that by marketing our encryption products and increasing
our advertising, sales will continue to increase to improve our liquidity.

The NASD  requires  that we  maintain a minimum  of $4  million of net  tangible
assets to  maintain  our  Nasdaq  National  Market  listing.  If our stock  were
delisted, the delisting could potentially have an adverse affect on the price of
our common stock and could adversely  affect the liquidity of the shares held by
our stockholders. Our net tangible assets as of July 31, 2000 were approximately
$6,963,000.  We anticipate that we may require  additional funds to maintain the
NASD net tangible  assets  requirement if funds  generated  from  operations are
insufficient.  We can give  you no  assurance  that we will be able to  generate
adequate funds from  operations,  that funds will be available to us from equity
financings,  or that if  available,  we will be able to  obtain  such  funds  on
favorable  terms and  conditions.  We currently have no definitive  arrangements
with respect to additional equity financings.

Shanghai CopyTele required an initial aggregate capital investment of $3,500,000
from the parties to the joint venture. The Joint Venture Agreement  contemplates
an additional  $3,500,000 of funding which may be borrowed from banks,  of which
approximately  $990,000 has been borrowed to date. These short-term loans, which
mature in November 2000, are from a Chinese bank,  secured by the building and a
land-use  contract with the Land  Administration  Bureau of Shanghai County.  We
have contributed  $1,225,000 in cash, and technology  valued for the purposes of
Shanghai CopyTele at $700,000, and the Chinese parties contributed $1,575,000 in
cash  to  Shanghai   CopyTele.   Shanghai   CopyTele   may  require   additional
capitalization  depending upon the nature and extent of its business activities.
We can give you no assurance  that adequate  funds will be available to Shanghai
CopyTele, including any future capital contributions, if any, beyond its initial
capital  contributions or that, if available,  Shanghai CopyTele will be able to
obtain such funds on favorable terms and conditions.

We have recorded our inventory at management's  current best estimate of its net
realizable  value,  which is based upon the historic and future selling price of
our products. To date, sales of our products have been limited.  Accordingly, we
can give you no  assurance  that we will not have to further  reduce the selling
prices of our  inventory  below its current  carrying  value to  accomplish  our
business strategies (Note 4).


                                       19
<PAGE>
    General Risks and Uncertainties
    -------------------------------

We have had  limited  sales to  dealers,  distributors  and other  customers  to
support our operations since our inception.  We have expended  approximately $33
million for research and development since our inception. We have had net losses
and  negative  cash flow from  operations  in each  year of our  business  since
inception  and we may  continue  to  incur  substantial  losses  and  experience
substantial negative cash flows from operations.

Based on  reductions in operating  expenses  that have been made and  additional
reductions  that may be  implemented,  if  necessary,  we believe  that our cash
resources  and cash  generated  from  operations  will be sufficient to continue
operations  through  the third  quarter  of fiscal  2001.  We  anticipate  that,
thereafter,  we may  continue  to  require  additional  funds  to  continue  our
marketing,   research  and  development  activities,   if  cash  generated  from
operations is insufficient to satisfy our liquidity requirements. We may seek to
sell debt or equity  securities  or to obtain a line of credit,  if  needed.  In
addition,  we may need to raise  additional  equity financing to satisfy an NASD
requirement  that we have a minimum  of $4  million  of net  tangible  assets to
maintain our Nasdaq  National  Market listing if funds generated from operations
are insufficient. The NASD also requires that we maintain a minimum bid price of
at least $1.00 per share in order to  continue  our  listing.  If our stock were
delisted,  the delisting could  potentially have an adverse affect on the market
price of our common stock and the  liquidity  of our shares.  We cannot give you
any assurance that additional  financing,  if needed, will be available to us or
that, if available,  we will be able to obtain additional financing on favorable
terms and  conditions.  See  "Management's  Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources".

Our  encryption  products are only in their  initial  stages of  production  and
marketing. The success and profitability of these products will depend upon many
factors,  many of which are  beyond  our  control,  including:  our  ability  to
successfully  market the USS-900 and the  DSS-1000;  our  continuing  ability to
purchase the Citadel(TM) CCX encryption chip from Harris for use in the USS-900,
the DSS-1000 and other  encryption  products;  our production  capabilities  and
those of our  suppliers  as required for the  production  of the USS-900 and the
DSS-1000,  and our other encryption products;  long-term product performance and
the  capability  of our  dealers  and  distributors  to  adequately  service our
products;  our ability to maintain an acceptable  pricing level to end-users for
our products;  the ability of suppliers to meet our  requirements  and schedule;
our  ability  to  successfully  develop  our  new  products  under  development,
particularly our new encryption products; rapidly changing consumer preferences;
and the  possible  development  of  competitive  products  that could render our
products  obsolete  or  unmarketable.  Consequently,  we  cannot  give  you  any
assurance that we will generate sufficient revenues to support our operations in
the future or that we will have sufficient revenues to generate profits.

Our Chief  Executive  Officer,  Denis A.  Krusos,  and our  President,  Frank J.
DiSanto,  founded  CopyTele  in  1982  and are  engaged  in the  management  and
operations of our business and that of Shanghai CopyTele,  including all aspects
of the development,  production and marketing of our products and our flat panel
display technology. Messrs. Krusos and DiSanto, and our other senior executives,


                                       20
<PAGE>
are important to our future business and financial  arrangements and the loss of
the  services  of any such  persons  may have a material  adverse  effect on our
business prospects.



PART II OTHER INFORMATION
        -----------------

Item 2. Changes in Securities and Use of Proceeds
        -----------------------------------------

        Recent Sales of Unregistered Securities
        ---------------------------------------

In May 2000,  the Company  issued  143,250  shares of Common Stock in connection
with the exercise of warrants to two  accredited  investors for purchase  prices
averaging  approximately  $1.40 per share,  or an  aggregate  of  $200,037.  The
exercise  prices  represented  the fair market  value of the common stock on the
date the related Stock Subscription  Agreements were entered into. The shares of
Common Stock were issued in reliance upon the exemption from registration  under
Section 4(2) of the Securities Act of 1933, as amended,  relative to sales by an
issuer not involving a public offering.

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

At the  Company's  Annual  Meeting of  Stockholders  held on July 25, 2000,  six
directors  were elected and the  CopyTele,  Inc. 2000 Share  Incentive  Plan was
approved. In addition,  the selection of Arthur Andersen LLP, independent public
accountants,  to audit the  financial  statements  of the Company for the fiscal
year ending October 31, 2000 was ratified.  The following is a tabulation of the
voting with respect to the foregoing matters:

  (a)  Election  of  Directors  -

                Nominee                   For                       Withheld

               Denis A.  Krusos         55,482,281                  1,977,534
               Frank J.  DiSanto        55,733,047                  1,726,768
               Gerald  J.  Bentivegna   55,082,553                  1,377,262
               George  P.  Larounis     55,957,595                  1,502,220
               Lewis H. Titterton       56,108,815                  1,351,000
               Anthony Bowers           55,977,595                  1,482,220



  (b) Approval of the CopyTele,  Inc. 2000 Share  Incentive Plan:

                For            Against         Abstain         Broker  Non-Votes

             17,204,896       5,398,530        299,677            34,557,193



  (c) Ratification  of  selection  of  Arthur  Andersen  LLP as  independent
      auditors for the fiscal year ending October 31, 2000:

                For            Against          Abstain

              56,994,185       366,434           99,196


                                       21
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
        --------------------------------

    (a) Exhibits
        --------

        10 - CopyTele,  Inc.  2000 Share  Incentive  Plan,  filed as Annex A to
        the Registrant's   Proxy  Statement  dated  June  12,  2000
        (incorporated  by reference).

        27 - Financial  Data Schedule

    (b) Reports on Form 8-K
        -------------------

        No current  report on Form 8-K was filed for the  Company  during the
        third quarter of its fiscal year ended July 31, 2000.




                                       22
<PAGE>


                                   SIGNATURES
                                   ----------

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

                                               CopyTele, Inc.



                                               By: DENIS A. KRUSOS
                                                  ------------------------
                                               Denis A. Krusos
                                               Chairman of the Board,
                                               Chief Executive Officer
                                               and Director (Principal Executive
September 14, 2000                             Officer)

                                               By: FRANK J. DISANTO
                                                  -------------------------
                                               Frank J. DiSanto
September 14, 2000                             President and Director

                                               By: GERALD J. BENTIVEGNA
                                                  -------------------------
                                               Gerald J. Bentivegna
                                               Vice President - Finance,
                                               Chief Financial Officer and
                                               Director (Principal Financial
September 14, 2000                             and Accounting Officer)


                                       23