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

                                    FORM 10-K

               | X | Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                   FOR THE FISCAL YEAR ENDED OCTOBER 31, 2000

                                       OR

                              |_| Transition Report
                            Pursuant to Section 13 or
                             15(d) of the Securities
                            Exchange Act of 1934 (No
                                  fee required)
                    for the transition period from ___ to ___

                          Commission file number 0-7642

                              MEGADATA CORPORATION
                              --------------------
               (Exact name of Company as specified in its charter)

           NEW YORK                                   11-2208938
           --------                                   ----------
 (State or other jurisdiction of
incorporation or organization)            (I.R.S. Employer Identification No.)

                       47 ARCH STREET, GREENWICH, CT 06830
                       -----------------------------------
               (Address of principal executive office) (Zip Code)

                           Company's telephone number,
                       including area code: 203-629-8757
                                            ------------

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

                Securities of the Company registered pursuant to
                            Section 12(g) of the Act:
                    COMMON SHARES, PAR VALUE $0.01 PER SHARE
                    ----------------------------------------

Indicate by check mark whether the Company (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 Company was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]

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

                       DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement for the 2001 Annual Meeting of
Stockholders (the "Proxy Statement") are incorporated by reference into Part III
of this Form 10K.

     The aggregate market value of the voting shares of the Company held by
               non-affiliates as at January 19, 2001 was $832,000

                  The number of common shares, $0.01 par value,
                outstanding as at January 19, 2001 was 3,473,115


                                                                    Page 1 of 50

<PAGE>






                                     PART I


ITEM 1. BUSINESS.
-----------------


          (A) GENERAL DEVELOPMENT OF BUSINESS.
          ------------------------------------


          Megadata Corporation, (the "Company"), a New York corporation founded
in 1967, is a supplier of information, data services, and software intended to
satisfy the needs of the aviation industry, primarily airlines and their
affiliates, and airports. Its principal business is the design, manufacture,
sale and service of its PASSUR product line consisting of a real time aircraft
monitoring system, as well as the delivery of application software, called
PASTRACK, and delivery of data from the existing PASSUR systems.

          The Company's primary product is the PASSUR (Passive Secondary
Surveillance Radar) System. PASSUR is an integrated operations control and
management system used by airlines at their dispatch and station control
centers. In addition, major airports worldwide use the PASSUR as part of an
integrated noise management and monitoring system as well as for operations
control.

          The Company, through a 1998 restructuring plan, has developed a new
method of delivering information to its customers. The Company is selling
subscription services from what is now becoming an international PASSUR Network
of flight tracking systems. The Company will also continue to sell stand-alone
PASSUR systems at a customer's request.

          The Company is transitioning from being a leading supplier of passive
surveillance systems (a capital equipment business) to a leading provider of
subscription based information and decision support services supplied by its
PASSUR Network. These services will leverage the extensive passive surveillance
data available through the network of PASSUR installations to provide
application-specific "efficiency tools" to airlines, airports and related
commercial businesses.

          To further enhance this subscription service from the PASSUR Network,
the Company provides its own proprietary software suite, called PASTRACK, which
enables the customer to incorporate many of the algorithms and functionality
already experienced by airline and airport customers over the past several
years.

          As a result, a larger audience of aviation and aviation-related
organizations can utilize the information generated from the PASSUR network,
thus creating additional demand for both the subscription services and the
resulting software.

          Currently, PASSUR flight track coverage is available for 22 of the
top 40 airports in the United States.

          The Company has incorporated the strictest levels of security over
both the information generated by the PASSUR Network and the resulting end
users.


                                                                    Page 2 of 50

<PAGE>


          TECHNICAL DESCRIPTION
          ---------------------

          The PASSUR system, without emitting any active signals, receives
aircraft identification and altitude information from aircraft transponder
transmissions without emitting any active signals, which are interrogated by
existing secondary surveillance radars. Received signals are processed in a
standard workstation and displayed on a high-resolution color graphics data
display to provide real-time identification and tracking of aircraft in flight.
The display presentation is similar to that provided to Air Traffic Controllers.
The presentation of flight tracks can be in real time or can be switched to a
mode that permits observance of historical data for selected time periods.

          AIRLINE CUSTOMERS
          -----------------

          The PASSUR application software, called PASTRACK, is an accurate
source of critical information to enhance situational awareness. Airlines use
the information to drive a number of operating efficiencies that improve
performance, increase customer satisfaction, and operating profits. These
include:
          -- Accurate arrival and estimated time of arrival ("ETA") information
available for passengers, particularly during irregular operations. The
information is also expandable for terminal passenger data services such as
Flight Information Display Systems (FIDS) or other displays.
          -- Greater compliance with the aviation community's goal to provide
timely and accurate flight information to customers.
          -- Accurate arrival data and ETA's for managing airport operations.
With better arrival information airlines can more effectively manage connecting
flights during push periods. This tool complements gate management and staff
scheduling programs and thus, enhances productivity improvements for ground
personnel and support functions.
          -- Accurate information to help manage diversions. A more accurate
picture of the terminal airspace and current holding patterns enables airlines
to make better decisions about whether to divert aircraft during irregular
operations.
          -- Ability to replay flight events to support post operations
analysis. The play back of flight tracks and events will allow airlines to
conduct a more thorough analysis of those events and thus, create opportunities
to improve the efficiency and safety of operations.

          AIRPORT CUSTOMERS
          -----------------

          The PASSUR system can be integrated to work with noise monitoring and
measuring equipment in a configuration that will supply a correlation between
aircraft location and noise levels generated by the aircraft. With this
real-time information, an airport noise abatement officer can enforce the law
regarding noise levels emitted by an aircraft. When used as part of an airport
noise monitoring system, airport managers and noise control officers can
correlate noise events in the local community with specific airline flight
tracks.

          PASSUR is used by many of the largest airports in the country and in
different parts of the world. Currently, over 20 of the largest airports around
the world utilize PASSUR as part of their daily operations. Several trials are
also underway at several additional airports.

          In 2000, the Company introduced an Airport Operations version of
PASTRACK. This product provides airports a predictive anticipatory operations
decision-making tool to effectively plan for arriving aircraft as well as
provide a playback capability for post operational analysis and planning.


          (B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
          --------------------------------------------------


          Not applicable.

                                                                    Page 3 of 50


<PAGE>





          (C) NARRATIVE DESCRIPTION OF BUSINESS.
          --------------------------------------


          The Company is a supplier of information, data services, and software
intended to satisfy the needs of the aviation industry, primarily airlines and
their affiliates, and airports. Its principal business is the design,
manufacture, sale and service of its PASSUR product line consisting of a real
time aircraft monitoring system, as well as the delivery of application
software, called PASTRACK, and delivery of data from the existing PASSUR
systems.

          1. PRODUCTS.
          ------------

          The Company is transitioning from being a leading supplier of passive
surveillance systems (a capital equipment business) to a provider of
subscription based information and decision support services supplied by its
PASSUR Network. These services will leverage the extensive passive surveillance
data available through the PASSUR Network to provide application-specific
efficiency tools to airlines, airports and related commercial businesses.

          (i) PASSUR Systems
          ------------------


          The PASSUR system is a reliable and cost effective source of time
critical and valuable information about the position and flight path of
aircraft. PASSUR is the engine that drives all present and future data,
information, and solution products. The Company, under an exclusive license for
patented technology owned by a third party, has used its proprietary hardware
and software to develop an enhanced line of air traffic monitoring systems. This
license agreement, which extends for the life of various patent expirations
through the year 2010, is important in protecting the unique nature of the
Company's PASSUR product line. These PASSUR (Passive Secondary Surveillance
Radar) systems receive and process aircraft identification from aircraft
transponder transmissions interrogated by existing secondary surveillance
radars.

          (ii) Custom Hardware and Software Activities
          --------------------------------------------

          The Company is occasionally involved in specialized research and
development projects sponsored and paid for by customers. These projects involve
the customization of the Company's standard products to suit specific customer
requirements.

          2. SERVICES.
          ------------


          (i) Information Services from the PASSUR Network


          Information Services include timely, accurate, user-friendly
information important to the efficient operation of airlines and airports. The
Information Services leverage the PASSUR Network, and are tailored to address
specific customer requirements uniquely available from Megadata. The services
provide airline and airport customers with specific and timely information
needed to efficiently manage their airport airside and ground operations. The
ETAs generated from the PASSUR system are an example of an information service
currently being used throughout the customer network.

                                                                    Page 4 of 50

<PAGE>


          (ii) Solution Services from the PASSUR Network
          ----------------------------------------------


          The Solution Services are a series of decision support tools and
software solutions developed to improve quality and operating efficiency of
specific airline and airport operations. Megadata currently provides a complete
solution to customers through system integrators, primarily in the airport
markets.

          (iii) Maintenance Services
          --------------------------

          The Company offers maintenance services pursuant to contractual
arrangements or an "on-call" basis. "On-call" services are provided on a time
and material basis.

          3. SOURCES OF RAW MATERIALS.
          ----------------------------


          The Company obtains its raw materials from component distributors and
manufacturers throughout the United States. The Company has multiple sources of
supply for a majority of its components.

          4. DEPENDENCE ON CERTAIN CUSTOMERS.
          -----------------------------------


          During the fiscal year ended October 31, 2000, three (3) customers
(Air Canada, United Airlines, and San Jose International Airport) accounted for
62% of revenue. Those three customers accounted for 40%, 11%, and 11% of
revenues. During the fiscal year ended October 31, 1999, three (3) customers
accounted for 66% of revenue. Those three customers accounted for 40%, 13%, and
13% of revenues. During the fiscal year ended October 31, 1998, three customers
accounted for 52% of the Company's revenue. Those three customers accounted for
28%, 14%, and 10% of revenues.

          5. BACKLOG.
          -----------


          The Company's backlog for products and services at October 31, 2000
amounted to approximately $627,000, all of which is scheduled for delivery or
performance before October 31, 2001, except for $180,000 scheduled for delivery
during fiscal 2002. The backlog at October 31, 1999 and 1998 amounted to
approximately $418,000 and $211,000, respectively. Backlog consists of written
purchase orders or contracts.

          6. COMPETITION.
          --------------


          The Company is offering the PASSUR system for passive detection of
aircraft in flight. These products are, to the best of its knowledge, relatively
unique with little competition. Depending on the end use of the products, the
Company's primary competitors include Dimensions International, Sabre, Inc.,
BAE, Inc., and Lockheed Martin. The Company also sells to systems integrators,
including BAE, Inc, and Lochard Pty, Ltd, some of whom also sell products which
are competitive with those offered by the Company. Most of these companies are
significantly larger than the Company, and have larger sales forces and greater
financial resources.

                                                                    Page 5 of 50



<PAGE>


          7. RESEARCH AND DEVELOPMENT.
          ----------------------------


          The Company's Research and Development ("R&D") effort is focused on
enhancing the Company's products primarily for software and hardware
enhancements to PASSUR.

          During the fiscal year ended October 31, 2000, the Company incurred
approximately $149,000 in expenditures for R&D, none of which was customer
sponsored. In fiscal year ended October 31, 1999, approximately $121,000 was
expended on R&D and in fiscal year 1998 approximately $122,000 was expended on
R&D.

          8. ENVIRONMENTAL COSTS.
          -----------------------


          The Company is not aware of any environmental issues, which would have
a material adverse affect on future capital expenditures or business operations.

          9. EMPLOYEES.
          -------------


          As of October 31, 2000, the Company employs 18 full time employees
including 6 officers.

(D) FINANCIAL INFORMATION ABOUT FOREIGN AND
    DOMESTIC OPERATIONS AND EXPORT SALES
    ------------------------------------


          The following table sets forth the dollar amount and the percentages
attributable to the sale by the Company of its products during the past three
fiscal years in and outside the United States:

Net
Revenues                2000                1999                   1998
--------                ----                ----                   ----


Domestic    $1,048,527    59.7%     $1,054,711     95.8%   $ 960,408      91.2%


Exports        708,075    40.3%         45,930     4.2%       92,835       8.8%


Total
Revenues:   $1,756,602   100.0%     $1,100,641   100.0%     $1,053,243   100.0%
            ==========   =====      ==========   =====      ==========   =====


                                                                    Page 6 of 50


<PAGE>



          ITEM 2. PROPERTIES.


          The Company's manufacturing and research facility is located in a
one-story 36,000 square foot building at 35 Orville Drive, Bohemia, New York.
The building was owned by the Company and was sold in October 1999 to an
unaffiliated buyer.  The Company leased back 12,000 square feet at an annual
rental cost of $72,000.

          The Company's executive offices are located in a three-story office
building at 47 Arch Street, Greenwich, Connecticut. Effective October 1998, the
Company began leasing space from Field Point Capital Management Company, a
company 100% owned by the Company's President at $1,000 per month rent. The
Company believes these rates are competitive and are at or below market rates.

          ITEM 3. LEGAL PROCEEDINGS.
          --------------------------


          The Company is not aware of any pending legal proceedings to which the
Company or any of its subsidiaries is a party or to which any of their
properties are subject.


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


          The Company did not submit any matter to a vote of its security
holders during the fourth quarter of fiscal 2000.


                                                                    Page 7 of 50


<PAGE>


                                     PART II

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


          (A) MARKET INFORMATION.


The Company's common shares are traded in the over-the-counter
bulletin board.

The following table sets forth the range of high and low bid and asked
quotations of the Company's common shares for each quarterly period during the
Company's last two fiscal years, as reported by the National Quotation Bureau,
Inc.:

P e r i o d                                  Bid Prices*           Asked Prices*
-----------                                  -----------           -------------

                                         High          Low       High       Low
                                         ----          ---       ----       ---
FISCAL YEAR ENDED OCTOBER 31, 2000
    FIRST QUARTER                       $1.75       $ .25      $2.00    $ .5625
    SECOND QUARTER                       3.375       1.375      4.00     1.80
    THIRD QUARTER                        1.50         .75       3.375     .9375
    FOURTH QUARTER                       1.09375      .78125    1.96875  1.00

Fiscal Year Ended October 31, 1999
    First Quarter                       $ .375      $ .28125   $ .5625  $ .50
    Second Quarter                        .34375      .15        .50      .50
    Third Quarter                         .15625      .15        .5625    .4375
    Fourth Quarter                        .25         .15625     .5625    .4375

* The quotations represent prices in the over-the-counter bulletin board between
dealers in securities, do not include retail markup, markdown, or commission,
and do not necessarily represent actual transactions.

          (B) HOLDERS.
          ------------


          The number of equity security holders of record at January 19, 2001
was 303.

          (C) DIVIDENDS.
          --------------


          The Company has never paid cash dividends on its shares. The Company
does not anticipate paying cash dividends in the foreseeable future.

                                                                    Page 8 of 50

<PAGE>


          ITEM 6. SELECTED FINANCIAL DATA.
          --------------------------------
<TABLE>
<CAPTION>

          Selected income statement data:

                                        YEAR ENDED OCTOBER 31,
-------------------------------------------------------------------------------------------------
                            2000            1999          1998           1997            1996
                            ----            ----          ----           ----            ----

Net
<S>                     <C>            <C>            <C>            <C>            <C>
Revenues                $ 1,756,602    $ 1,100,641    $ 1,053,243    $ 1,478,952    $ 1,111,961

Net
(Loss)                     (582,824)      (322,812)      (880,749)       (54,500)      (584,750)

Net (Loss) Per
Common Share                   --
Basic and diluted (1)   $      (.22)   $      (.13)   $      (.35)   $      (.03)   $      (.36)

Dividend Declared              --             --             --             --             --
-------------------------------------------------------------------------------------------------


          Selected balance sheet data:

                                                                 OCTOBER 31,
-------------------------------------------------------------------------------------------------


                                 2000         1999            1998         1997          1996
                                 ----         ----            ----         ----          ----


Total Assets                $ 2,348,082   $ 1,572,865    $ 1,794,990   $ 2,595,296   $ 2,183,896

Long-Term
Debt (2)(3)(4)(5)(6)        $   152,985   $   337,945    $   625,548   $   721,036   $   674,278

Total Share-
holders' Equity (Deficit)   $   604,216   $   (14,854)   $   307,958   $ 1,193,625   $   657,285

-------------------------------------------------------------------------------------------------
<FN>


(1)  Net loss per common share was computed using the weighted average number of
     common shares outstanding during the period. Conversion of the common
     equivalent shares was not assumed since the result would have been
     antidilutive.
(2)  The mortgage loan to Roslyn Savings Bank was paid in full upon the sale of
     the Company's mortgaged property on October 22, 1999.
(3)  Long Term Debt for 1997 included a $100,000 note payable, which was due
     after October 31, 1998.
(4)  Long Term Debt for 1998 included a $25,000 note payable, and a $37,894
     installment note payable, which were due after October 31, 1999.
(5)  Long term Debt for 1999 included $325,000 of notes payable, and $12,945 of
     installment notes payable, which were due after October 31, 2000.
(6)  Long-term debt for 2000 included $150,000 of notes payable, and $2,985 of
     installment notes payable, which are due after October 31, 2000.
</FN>
</TABLE>


                                                                    Page 9 of 50


<PAGE>


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


RESULTS OF OPERATIONS
---------------------

REVENUES
--------

          Revenue during the fiscal year ended October 31, 2000 ("fiscal 2000")
of $1,756,602 increased by $655,961, or 60%, as compared to the fiscal year
ended October 31, 1999 ("fiscal 1999"). Net sales of systems increased in fiscal
2000 by $537,480 due to an increase in PASSUR Systems and upgrades offset by
decreases in non-PASSUR product line revenue categories. Subscription and
maintenance fees have increased in fiscal 2000 by $118,481 as compared to fiscal
1999.

          The Company shipped nine and installed six Company-owned PASSUR
systems during the year, which are shown on the balance sheet as the "PASSUR
network", and is selling the data from these systems to multiple users. With 16
Company owned PASSUR's located at airports at the end of fiscal 2000, the
Company believes the revenue stream from PASSUR Subscriptions will continue to
increase steadily.

          Revenue during fiscal 1999 of $1,100,641 increased by $47,398, or 5%,
as compared to the fiscal year ended October 31, 1998 ("fiscal 1998"). The
increase was due to additional revenue from most PASSUR related sales
categories, which were offset by decreases in non-PASSUR related sales
categories. Increases occurred in the following sales categories: PASSUR
Systems, PASSUR Maintenance, PASSUR Upgrades, and Miscellaneous Sales. Decreases
occurred in Service Sales, Radio Modems, Unix Systems, and Protocol Converters.

COST OF SALES
-------------

          Cost of sales during fiscal 2000 of $860,487 increased by $621,342 as
compared to fiscal 1999. The contributing factors to this increase in cost of
sales were: the increased sale of PASSUR Systems; the charge for inventory
associated with all non-PASSUR product lines which the Company has decided to
discontinue marketing in the amount of $114,549; the charge for certain
inventory associated with older PASSUR production models in the amount of
$11,042; increased costs associated with the expanding PASSUR Network operation
including connection costs in the amount of $144,797; and depreciation charges
associated with the Company owned PASSUR Network in the amount of $135,694.

          Cost of sales in fiscal 1999 of $239,145 was lower than in fiscal 1998
by $690,874 due to higher production of PASSUR units for sale and for the
Company owned PASSUR Network which resulted in a lower cost per unit produced.

                                                                   Page 10 of 50

<PAGE>


RESEARCH AND DEVELOPMENT
------------------------

          The Company's research and development expenses of $148,540 in fiscal
2000 increased by 23% over the $120,536 in fiscal 1999. Research and development
costs were $121,789 in fiscal 1998. The Company anticipates continued increases
in research and development expenditures as it develops new products associated
with PASSUR and expands the current services offered through its PASSUR Network.
Research and development efforts include activities associated with enhancement
and improvement of the Company's existing hardware and software coupled with
customer sponsored research and development expenditures for new product
development. No customer sponsored research and development was conducted during
fiscal 2000 and fiscal 1999. Research and development expenses are funded
through current operations.

SELLING, GENERAL AND ADMINISTRATIVE
-----------------------------------

          Selling, general and administrative expenditures of $1,218,825 in
fiscal 2000 increased by $203,377, or 20%, as compared to fiscal 1999 as the
Company continued its aggressive sales and marketing plan for its PASSUR product
line. Salaries, professional fees, travel, and advertising expenses accounted
for most of the increase.

          Selling, general and administrative expenditures of $1,015,448 in
fiscal 1999 increased by $381,206 or 60%, as compared to fiscal 1998, as the
Company significantly increased sales and marketing for its major PASSUR System
product line. Salaries, professional fees, consulting, travel, and advertising
expenses accounted for most of the increase.

RESTRUCTURING CHARGE
--------------------

          In October 1998, the Company announced a Restructuring Plan in which
it focused future efforts primarily on the PASSUR line of passive radar systems.
As part of this restructuring, the Company moved its corporate headquarters and
national sales office to Greenwich, Connecticut. The Company offered for sale
its building in Bohemia, New York. The building was sold in October 1999 to an
unaffiliated buyer, and the Company leased back 12,000 square feet at an annual
rental cost of $72,000.

          The restructuring charges in fiscal 1998 include idle plant costs of
$93,000 related to the building, severance costs of $53,000, asset write-downs
of $24,000 relating to assets to be sold or abandoned, and inventory write-downs
of $196,000 associated with the write down of certain non-strategic inventory
and product lines (which costs are included in costs of sales for fiscal 1998).
As of October 31, 1999, all amounts which had been accrued for the restructuring
charge were paid.

INTEREST EXPENSE
----------------

          Interest expense - related party of $121,050 in fiscal 2000 increased
by $41,013 due to increased borrowings during fiscal 2000. Interest expense
decreased by $54,125 in fiscal 2000 due to the Company's repayment of the
mortgage on the building, which was sold.

          Interest expense - related party of $80,037 in fiscal 1999 increased
by $65,037 due to increased borrowings during fiscal 1999.


                                                                   Page 11 of 50



<PAGE>


INCOME TAXES
------------

          The provisions for income taxes for each year relate to state and
local minimum taxes. The Company has available approximately $6,800,000 in tax
loss carryforwards to offset possible future income. The Company also has
available $25,000 in general business tax credit carryforwards. These
carryforwards expire in various tax years from 2004 through 2019. The Company
has provided a full valuation allowance on the net deferred tax asset which
primarily consists of the net operating loss carry-forwards and available tax
credits.

NET LOSS
--------

          The Company incurred a net loss of $582,824, or $.22 per common share,
during fiscal 2000, as compared to a net loss of $322,812, or $.13 per common
share incurred in fiscal 1999.


          During the fiscal year ended October 31, 2000, costs and expenses of
$2,227,852 were higher than total revenue and resulted in a loss from operations
of $471,250. Total costs and expenses increased by $852,723, or 62%, as compared
to such costs in fiscal 1999. Despite the increase in revenue of almost 60%,
increased costs associated with the placement, operation, development, and
marketing of the Company owned PASSUR Network contributed to the additional
loss. In addition, during the year ended October 31, 2000, inventory associated
with discontinued products of $114,549 was written off.

          During the fiscal year ended October 31, 1999, costs and expenses of
$1,375,129 were higher than total revenue and resulted in a loss from operations
of $274,488.

IMPACT OF INFLATION
-------------------

          In the opinion of management, inflation has not had a material effect
on the operations of the Company including selling prices, capital expenditures,
and operating expenses.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

          At October 31, 2000, the Company's current liabilities exceeded
current assets by $1,080,019 and the Company reflected a stockholders' equity of
$604,216. For the year ended October 31, 2000, the Company incurred a net loss
of $582,824.

          Net cash provided by operating activities for fiscal 2000 was
approximately $76,000. Non-cash expenses of approximately $213,000 and changes
in operating assets and liabilities more than offset the impact of the Company's
net loss.

          Cash flows used in investing activities for fiscal 2000 were
approximately $1,241,000 which consisted primarily of investments in the
Company's PASSUR Network.

          Cash flows provided by financing activities for fiscal 2000 were
approximately $934,000 and consisted primarily of proceeds from notes payable to
a related party.

          Management is addressing the working capital deficiency and operating
losses by aggressively marketing its PASSUR systems and increasing the size of
the Company owned PASSUR Network, which should lead to increased data
subscription services. In addition, the Company will attempt to obtain external
financing, and if such external financing is not consummated, the Company will
receive the financial support from one of its stockholders.


                                                                   Page 12 of 50

<PAGE>


          The Company was unprofitable for fiscal 2000. However, the Company
anticipates increased revenue which could lead to profitability in fiscal 2001
although no assurances can be provided in this regard. Since the increased sales
effort began in August 1998, the Company has seen many positive signs that its
PASSUR product line could provide additional revenue. With the Company's
decision to establish a network of Company-owned PASSUR sites, additional
revenue could be earned through its subscription services. However, increased
competition, and continued budget constraints among its clients, could impact
this potential revenue.

          Interest by potential customers in the Company's PASSUR systems and
data obtained from the PASSUR Network remains strong and the Company anticipates
an increase in future revenue. However, the Company cannot predict if such
revenue will materialize. If sales do not increase, additional losses may occur
and could continue. The extent of such profits or losses will be dependent on
sales volume achieved.

CERTAIN TRANSACTIONS
--------------------

          On June 30, 2000, G.S. Beckwith Gilbert, Chairman and Chief Executive
Officer of the Company, converted certain promissory notes of the Company which
matured on that date into shares of common stock of the Company. The notes were
originally issued by the Company between November 1998 and August 1999 in
exchange for financing provided by Mr. Gilbert. Mr. Gilbert converted the full
principal amount of the two notes and part of the principal amounts of nine
other notes, together with interest accrued thereon (an aggregate amount of
$583,144, including accrued interest) into 466,515 shares of common stock of the
Company, at the conversion rate of $1.25 per share.

          On October 31, 2000, Mr. Gilbert exercised a warrant for 500,000
shares of common stock of the Company (at the exercise price of $1.25 per share)
in exchange for cancellation of debt owed by the Company to Mr. Gilbert in the
amount of $625,000, which debt matured on October 31, 2000. The warrant was
originally issued to Mr. Gilbert by the Company in June 1997 as part of a
financing agreement with Mr. Gilbert.

          In fiscal 2000, Mr. Gilbert loaned the Company $1,000,000 in the
aggregate under promissory notes bearing interest at 9% per annum and maturing
at various dates from June 30, 2000 to December 31, 2001. The Company made
payments of principal during the fiscal year totaling $25,000 due to Mr.
Gilbert, and $1,175,000 in principal amounts due were exchanged for equity. As
of October 31, 2000, the total notes payable due to Mr. Gilbert totaled $950,000
and are secured by the Company's assets. Maturities of these notes payable for
the fiscal years ended October 31 are as follows: 2001 - $800,000 and 2002 -
$150,000.

RISK FACTORS; FORWARD LOOKING STATEMENTS
----------------------------------------

          The Management's Discussion and Analysis and the information provided
elsewhere in this Annual Report on Form 10-K (including, without limitation, in
"Item 1. Business" as well as "Liquidity and Capital Resources" above) contain
forward-looking statements regarding the Company's future plans, objectives, and
expected performance. These statements are based on assumptions that the Company
believes are reasonable, but are subject to a wide range of risks and
uncertainties, and a number of factors could cause the Company's actual results
to differ materially from those expressed in the forward-looking statements
referred to above. These factors include, among others, the uncertainties
related to the ability of the Company to make new sales of its PASSUR and other
product lines due to potential competitive pressure from other companies or
other products. Other uncertainties which could impact the Company are
uncertainties with respect to future changes in governmental regulation
affecting the product and its use in flight dispatch. Additional uncertainties
are related to the Company's ability to find and maintain the personnel
necessary to sell, manufacture, and service its products.


                                                                   Page 13 of 50


<PAGE>



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
--------------------------------------------------------------------

The Company is exposed to market risk from potential changes in interest rates
and foreign exchange rates. The Company regularly evaluates these risks. The
Company believes the amount of risk and the use of derivative financial
instruments are not material to the Company's financial condition or results of
operations.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA.
---------------------------------------------------

See Item 14(a)(1) and (2).

ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
-------------------------------------------------------------

None.



                                                                   Page 14 of 50

<PAGE>


                        Form 10-K--Item 14(a)(1) and (2)

                      Megadata Corporation and Subsidiaries


                   Index to Consolidated Financial Statements




Report of Independent Auditors........................................... F - 2

Consolidated Financial Statements:
   Balance Sheets........................................................ F - 3
   Statements of Operations.............................................. F - 4
   Statements of Stockholders' Equity (Deficit).......................... F - 5
   Statements of Cash Flows.............................................. F - 6
   Notes to Consolidated Financial Statements............................ F - 7



Schedules for which provision is made in the applicable accounting regulation of
the Securities and Exchange Commission are not required under the related
instructions or are inapplicable, and therefore have been omitted.



                                     F - 1


                                                                   Page 15 of 50


<PAGE>







                         Report of Independent Auditors



Board of Directors and Stockholders
Megadata Corporation and Subsidiaries

We have audited the accompanying consolidated balance sheets of Megadata
Corporation and Subsidiaries as of October 31, 2000 and 1999, and the related
consolidated statements of operations, stockholders' equity (deficit), and cash
flows for each of the three years in the period ended October 31, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Megadata Corporation and Subsidiaries at October 31, 2000 and 1999, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended October 31, 2000, in conformity with accounting
principles generally accepted in the United States.


                                                        /s/ Ernst & Young LLP
                                                        ---------------------

Melville, New York
January 19, 2000

                                                                   Page 16 of 50



                                      F - 2


<PAGE>
<TABLE>
<CAPTION>


                      Megadata Corporation and Subsidiaries

                           Consolidated Balance Sheets


                                                                                          OCTOBER 31,
                                                                                  2000          1999
                                                                             ------------    -----------
ASSETS
Current assets:
<S>                                                                           <C>            <C>
   Cash                                                                       $    69,090    $   299,276
   Accounts receivable                                                            175,188         85,237
   Inventories                                                                    253,049        448,630
   Prepaid expenses and other current assets                                       13,535         62,002
                                                                              -----------    -----------
Total current assets                                                              510,862        895,145

Property, plant and equipment, net                                                196,949         72,785
PASSUR network, net                                                             1,624,186        581,525
Other assets                                                                       16,085         23,410
                                                                              -----------    -----------
                                                                              $ 2,348,082    $ 1,572,865
                                                                              ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
   Accounts payable                                                           $   242,565    $    36,923
   Accrued expenses and other current liabilities                                 313,427        226,538
   Accrued expenses--related parties                                               85,174         19,303
   Notes payable--related party                                                   800,000        825,000
   Deferred income                                                                138,909        106,670
   Installment notes payable                                                       10,806         35,340
                                                                              -----------    -----------
Total current liabilities                                                       1,590,881      1,249,774

Notes payable--related party, less current portion                                150,000        325,000
Installment notes payable, less current portion                                     2,985         12,945
                                                                              -----------    -----------
                                                                                1,743,866      1,587,719
Stockholders' equity (deficit):
   Common shares--authorized 10,000,000 shares, par value
      $.01 per share; issued 4,169,615 in 2000 and 3,203,100 shares in 1999        41,696         32,031
   Additional paid-in capital                                                   3,659,132      2,460,653
   Accumulated deficit                                                         (1,473,137)      (890,313)
                                                                              -----------    -----------
                                                                                2,227,691      1,602,371
   Less cost of 696,500 in 2000 and 691,500 in 1999
      common shares held in treasury                                            1,623,475      1,617,225
                                                                              -----------    -----------
Total stockholders' equity (deficit)                                              604,216        (14,854)
                                                                              -----------    -----------
                                                                              $ 2,348,082    $ 1,572,865
                                                                              ===========    ===========

</TABLE>


                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                      F - 3


<PAGE>

<TABLE>
<CAPTION>

                      Megadata Corporation and Subsidiaries

                      Consolidated Statements of Operations


                                                                            YEAR ENDED OCTOBER 31,
                                                                      2000           1999           1998
                                                                  ------------------------------------------
Revenues:
<S>                                                               <C>            <C>            <C>
    Systems                                                       $ 1,139,538    $   602,058    $   576,894
    Subscription and maintenance                                      617,064        498,583        476,349
                                                                  -----------    -----------    -----------
   Net sales                                                        1,756,602      1,100,641      1,053,243
                                                                  -----------    -----------    -----------

Cost and expenses:
   Cost of sales                                                      860,487        239,145        930,019
   Research and development                                           148,540        120,536        121,789
   Selling, general and administrative expenses                     1,218,825      1,015,448        634,242
   Restructuring charge                                                  --             --          170,140
                                                                  -----------    -----------    -----------
                                                                    2,227,852      1,375,129      1,856,190
                                                                  -----------    -----------    -----------

Loss from operations                                                 (471,250)      (274,488)      (802,947)

Other income (expense):
   Interest income                                                      8,108          2,738          7,301
   Interest expense                                                    (4,475)       (58,600)       (61,714)
   Interest expense--related party                                   (121,050)       (80,037)       (15,000)
   Other income                                                         8,110         13,820           --
   Gain on sale of building                                              --           77,036           --
                                                                  -----------    -----------    -----------
Loss before income taxes                                             (580,557)      (319,531)      (872,360)
Provision for income taxes                                              2,267          3,281          8,389
                                                                  -----------    -----------    -----------
Net loss                                                          $  (582,824)   $  (322,812)   $  (880,749)
                                                                  ===========    ===========    ===========

Net loss per common share--basic and diluted                      $      (.22)   $      (.13)   $      (.35)
                                                                  ===========    ===========    ===========
Weighted average number of common shares outstanding--basic and
   diluted                                                          2,670,132      2,511,600      2,511,600
                                                                  ===========    ===========    ===========
</TABLE>



                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.







                                      F - 4

<PAGE>

<TABLE>
<CAPTION>

                      Megadata Corporation and Subsidiaries

            Consolidated Statements of Stockholders' Equity (Deficit)

                    Years Ended October 31, 1998, 1999, 2000



                                      COMMON
                                   SHARES AFTER
                                    DEDUCTING
                                  TREASURY STOCK     COMMON      ADDITIONAL     RETAINED      LESS SHARES         TOTAL
                                                     SHARES       PAID-IN       EARNINGS    HELD IN TREASURY   STOCKHOLDERS'
                                                     AMOUNT       CAPITAL      (DEFICIT)                          EQUITY
                                 --------------------------------------------------------------------------------------------

<S>                                <C>          <C>           <C>            <C>            <C>           <C>
Balance at October 31, 1997         2,511,600    $    32,031   $ 2,465,571    $   313,248    $ 1,617,225   $ 1,193,625
   Fees in connection with
       issuance of common stock        (4,918)          --          (4,918)
   Net loss                              --             --            --         (880,749)          --        (880,749)
                                  -----------    -----------   -----------    -----------    -----------   -----------
Balance at October 31, 1998         2,511,600         32,031     2,460,653       (567,501)     1,617,225       307,958
    Net loss                             --             --            --         (322,812)          --        (322,812)
                                  -----------    -----------   -----------    -----------    -----------   -----------
Balance at October 31, 1999         2,511,600         32,031     2,460,653       (890,313)     1,617,225       (14,854)
    Exchange of note payable
        for common stock              466,515          4,665       578,479            --            --         583,144
    Purchase of treasury stock         (5,000)          --           --               --           6,250        (6,250)
   Exercise of common
        stock warrants                500,000          5,000       620,000            --            --         625,000
   Net loss                              --             --            --         (582,824)          --        (582,824)
                                  -----------    -----------   -----------    -----------    -----------   -----------
Balance at October 31, 2000         3,473,115    $    41,696   $ 3,659,132    $(1,473,137)   $ 1,623,475   $   604,216
                                  ===========    ===========   ===========    ===========    ===========   ===========

</TABLE>


                SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.




                                      F - 5

<PAGE>

<TABLE>
<CAPTION>

                      Megadata Corporation and Subsidiaries
                      Consolidated Statements of Cash Flows

                                                                                   YEAR ENDED OCTOBER 31,
                                                                           2000           1999            1998
                                                                      ------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                   <C>            <C>            <C>
Net loss                                                              $  (582,824)   $  (322,812)   $  (880,749)
Adjustments to reconcile net loss to net cash provided by (used in)
   operating activities:
      Depreciation and amortization                                       179,653         74,416         68,103
      Gain on sale of building                                               --          (77,036)          --
      Loss on disposal of fixed assets                                       --             --           11,594
      Interest expense converted into common stock                         33,144           --             --
      Changes in operating assets and liabilities:
        Accounts receivable                                               (89,951)       (49,896)       264,245
        Inventories                                                        89,890       (181,714)       181,859
        Prepaid expenses and other current assets                          48,467         (3,071)        28,630
        Other assets                                                        7,325          9,916        (11,438)
        Accounts payable                                                  205,642        (99,093)       (19,973)
        Accrued expenses, deferred income,
           and other current liabilities                                  184,999       (106,345)        99,044
                                                                      -----------    -----------    -----------
Total adjustments                                                         659,169       (432,823)       622,064
                                                                      -----------    -----------    -----------
Net cash provided by (used in) operating activities                        76,345       (755,635)      (258,685)
                                                                      -----------    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
PASSUR network                                                         (1,178,354)      (584,214)          --
Capital expenditures                                                      (62,433)       (33,464)       (21,141)
Proceeds from sale of building, net                                          --        1,360,608           --
                                                                      -----------    -----------    -----------
Net cash (used in) provided by investing activities                    (1,240,787)       742,930        (21,141)
                                                                      -----------    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock                                                 (6,250)          --             --
Proceeds from  notes payable--related party                               975,000        950,000           --
(Payments of) proceeds from installment note                              (34,494)       (34,714)        37,122
Repayments of long-term debt                                                 --         (621,036)       (53,242)
Payment of fees in connection with stock sale                                --             --           (4,918)
                                                                      -----------    -----------    -----------
Net cash provided by (used in) financing activities                       934,256        294,250        (21,038)
                                                                      -----------    -----------    -----------

(Decrease) increase in cash                                              (230,186)       281,545       (300,864)
Cash--beginning of year                                                   299,276         17,731        318,595
                                                                      -----------    -----------    -----------
Cash--end of year                                                     $    69,090    $   299,276    $    17,731
                                                                      ===========    ===========    ===========

SUPPLEMENTAL CASH FLOW INFORMATION
Acquisition of equipment financed
    with notes payable                                                       --      $    11,875    $    22,410
Exchange of notes payable - related party for common stock
                                                                      $   550,000           --             --
Common stock warrants exercised by exchanging notes payable -
   related party                                                      $   625,000           --             --
Cash paid during the year for:
   Interest                                                           $    84,769    $   123,147    $    79,103
   Income taxes                                                       $     2,090    $       438    $     1,456

</TABLE>


                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                      F - 6

<PAGE>

                      Megadata Corporation and Subsidiaries

                   Notes to Consolidated Financial Statements

                                October 31, 2000


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

Megadata Corporation (the "Company") is a supplier of information, data
services, and software intended to satisfy the needs of the aviation industry,
primarily airlines and their affiliates, and airports. Its principal business is
the design, manufacture, sale and service of its PASSUR product line consisting
of a real time aircraft monitoring system, as well as the delivery of
application software, called PASTRACK, and delivery of data from the existing
PASSUR systems.

BASIS OF PRESENTATION

At October 31, 2000, the Company's current liabilities exceeded current assets
by $1,080,019 and the Company incurred a net loss of $582,824 for the year ended
October 31, 2000.

Management is addressing the working capital deficiency and operating losses by
aggressively marketing its PASSUR systems and increasing the placement of the
Company owned PASSUR Network, which should lead to increased data subscription
services. In addition, the Company will attempt to obtain external financing,
and if such external financing is not consummated, the Company will receive the
financial support from one of its stockholders.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Megadata
Corporation and its wholly owned subsidiaries. All significant inter-company
transactions and balances have been eliminated in consolidation.









                                      F - 7

<PAGE>


                      Megadata Corporation and Subsidiaries

                   Notes to Consolidated Financial Statements

                                October 31, 2000


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.

INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out method) or
market.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are recorded at cost and are depreciated on a
straight-line basis over the estimated useful life. Leasehold improvements are
amortized on a straight-line basis over the useful life of the improvement or
the term of the lease, whichever is shorter.

PASSUR NETWORK

PASSUR network installations are recorded at cost, net of depreciation of
$138,382 in fiscal 2000. Depreciation is computed on the straight-line method
over the estimated useful life of the asset, which is estimated at 7 years.




                                      F - 8

<PAGE>


                      Megadata Corporation and Subsidiaries

                   Notes to Consolidated Financial Statements

                                October 31, 2000


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

IMPAIRMENT OF LONG-LIVED ASSETS

The Company follows the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of." This standard establishes the
accounting for the impairment of long-lived assets, certain identifiable
intangibles and the excess of cost over net assets acquired, related to those
assets to be held and used in operations, whereby impairment losses are required
to be recorded when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the assets'
carrying amount. SFAS No. 121 also addresses the accounting for long-lived
assets and certain identifiable intangibles that are expected to be disposed of.

REVENUE RECOGNITION POLICY

The Company recognizes revenue when products are shipped. Service and
maintenance revenues are recognized on a straight-line basis over the service
contract period. Revenue for data subscription services is recognized pursuant
to the specific arrangements with the customer and execution of an agreement and
upon their receipt of the data.

COST OF SALES

The Company has not segregated its cost of sales between cost of tangible
products and cost of services as it is not practicable to segregate such costs.

INCOME TAXES

The Company and its subsidiaries file a consolidated Federal income tax return.
The Company uses the liability method in accounting for income taxes in
accordance with SFAS No. 109, "Accounting for Income Taxes." Under this method,
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities, and are measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse.


                                      F - 9

<PAGE>


                      Megadata Corporation and Subsidiaries

                   Notes to Consolidated Financial Statements

                                October 31, 2000


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RESEARCH AND DEVELOPMENT COSTS

Research and development costs are charged to operations as incurred.

NET LOSS/INCOME PER COMMON SHARE INFORMATION

The Company reports basic and diluted net loss/income per common share in
accordance with the Financial Accounting Standards Board Statement No. 128,
"Earnings Per Share." Net loss per common share was computed using the weighted
average number of common shares outstanding during the period. Conversion of the
common equivalent shares relating to outstanding stock options and warrants was
not assumed since the result would have been antidilutive.

DEFERRED INCOME

Deferred income includes advances received on maintenance agreements,
subscription services, and deposits from customers for equipment that will be
shipped in the next fiscal year.

2. INVENTORIES

Inventories are summarized as follows:

                                                        OCTOBER 31,
                                                 2000                1999
                                          ------------------- -----------------

Parts and raw materials                   $     67,046          $    160,141
Work-in-process                                  6,676                54,308
Finished goods                                 179,327               234,181
                                          ------------------- -----------------
                                          $    253,049          $    448,630
                                          =================== =================

During the year ended October 31, 2000, inventory associated with discontinued
products of $114,549 was written off.





                                     F - 10

<PAGE>


                      Megadata Corporation and Subsidiaries

                   Notes to Consolidated Financial Statements

                                October 31, 2000

3. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>


                                            ESTIMATED
                                             USEFUL                       OCTOBER 31,
                                              LIVES                2000                1999
                                            --------------- ------------------- --------------------

<S>                                        <C>              <C>                  <C>
Building/leasehold improvements              3-5 years        $       98,410       $      76,818
Factory equipment                           5-10 years             2,326,191           2,292,337
Furniture, fixtures and improvements        5-10 years               311,120             198,443
                                                            ------------------- --------------------
                                                                   2,735,721           2,567,598
Less accumulated depreciation
     and amortization
                                                                   2,538,772           2,494,813
                                                            ------------------- --------------------
                                                            $        196,949       $      72,785
                                                            =================== ====================
</TABLE>


The Company recorded depreciation and amortization expense on the assets
included in property, plant and equipment of $43,959, $71,727, and $68,103 for
the years ended October 31, 2000, 1999, and 1998 respectively.


4. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

                                                           OCTOBER 31,
                                                      2000               1999
                                               ---------------- ---------------
Accrued payroll, payroll taxes and benefits    $     106,621    $       75,794
Accrued professional fees                             99,000            50,200
Accrued license fees                                  70,628            50,000
Other accrued liabilities                             37,178            50,544
                                               ---------------- ---------------
                                               $     313,427    $      226,538
                                               ================ ===============









                                     F - 11

<PAGE>


                      Megadata Corporation and Subsidiaries

                   Notes to Consolidated Financial Statements

                                October 31, 2000


5. NOTES PAYABLE--RELATED PARTY

On June 30, 2000, G.S. Beckwith Gilbert, Chairman and Chief Executive Officer of
the Company converted certain promissory notes of the Company which matured on
that date into shares of common stock of the Company. The notes were originally
issued by the Company between November 1998 and August 1999 in exchange for
financing provided by Mr. Gilbert. Mr. Gilbert converted the full principal
amount of the two notes and part of the principal amounts of nine other notes,
together with interest accrued thereon (an aggregate amount of $583,144,
including accrued interest) into 466,515 shares of common stock of the Company,
at the conversion rate of $1.25 per share.

On October 31, 2000, Mr. Gilbert exercised a warrant for 500,000 shares of
common stock of the Company (at the exercise price of $1.25 per share) in
exchange for cancellation of debt owed by the Company to Mr. Gilbert in the
amount of $625,000, which debt matured on October 31, 2000. The warrant was
originally issued to Mr. Gilbert by the Company in June 1997 as part of a
financing agreement with Mr. Gilbert.

In fiscal 2000, Mr. Gilbert loaned the Company $1,000,000 in the aggregate under
promissory notes bearing interest at 9% per annum and maturing at various dates
from June 30, 2000 to December 31, 2001. The Company made payments of principal
during the fiscal year totaling $25,000 due to Mr. Gilbert, and $1,175,000 in
principal amounts due were exchanged for equity. As of October 31, 2000, the
total notes payable due to Mr. Gilbert totaled $950,000 and are secured by the
Company's assets. Maturities of these notes payable for the fiscal years ended
October 31 are as follows: 2001 - $800,000 and 2002 - $150,000.

6. LEASES

The Company's manufacturing and research and development facility is located in
leased space in Bohemia, New York, under a lease which expires in October 2002.
Minimum rent under this agreement approximates $72,000 per year. This lease
provides for additional payments of real estate taxes and other operating
expenses over the minimum rental amount and has a renewal option for an
additional three years at annual amounts in excess of the minimum annual rental
per the original agreement.




                                     F - 12

<PAGE>




                      Megadata Corporation and Subsidiaries

                   Notes to Consolidated Financial Statements

                                OCTOBER 31, 2000


7. RESTRUCTURING RELATED CHARGES

In October 1998, the Company announced a Restructuring Plan which focused the
future activity of the Company primarily on its PASSUR line of passive radar
systems. As part of this restructuring, the Company moved its corporate
headquarters and national sales office to Greenwich, Connecticut. The Company
had offered for sale its building in Bohemia, New York and such sale was
consummated in October 1999.

The Restructuring Charges include exit costs of $93,000 related to the building,
severance costs of $53,000, asset write-downs of $24,000 relating to assets to
be sold or abandoned, and inventory write-downs of $196,000 associated with the
elimination of certain non-strategic inventory and product lines (which costs
are included in cost of sales for the year ended October 31, 1998). As of
October 31, 1999, all amounts which had been accrued for the restructuring
charges were paid.

8. INSTALLMENT NOTES PAYABLE

Installment notes payable represent notes due on financing of insurance premiums
and equipment purchases bearing interest at 8.25%, 12.5%, and 13.6% per annum,
with the final payments due November 2000, August 2001, and October 2002,
respectively.

9. INCOME TAXES

The Company's provision for income taxes in each year consists of current state
and local minimum taxes.

At October 31, 2000, the Company has available a federal net operating loss
carry-forward of approximately $6,800,000 for income tax purposes which will
expire in various tax years from 2004 through 2019. The Company has
approximately $25,000 of general business tax credit carry-forwards available
which expire in various years through 2008. The Company has provided a full
valuation allowance on the net deferred tax asset which primarily consists of
the net operating loss carry-forwards and available tax credits.







                                     F - 13

<PAGE>


                      Megadata Corporation and Subsidiaries

                   Notes to Consolidated Financial Statements

                                October 31, 2000


10. STOCK OPTIONS

The Company's stock option plans provide for the granting of stock options for
up to 802,500 shares of the Company's Common Stock. The option price per share
is the fair market value at date of grant, except on the issuance of
non-qualified options in which the option price is not less than 85% of the fair
market value of the shares. Options granted may be exercised up to a maximum of
ten years from the date of grant; however, individuals who own more than 10% of
the Company's Common Stock must exercise their options within five years of the
date of the grant and these options are exercisable at 110% of the fair market
value of the shares.

SFAS No. 123 "Accounting for Stock-Based Compensation", defines a fair value
method of accounting for the issuance of stock options and other equity
instruments. Under the fair value method, compensation cost is measured at the
grant date based on the fair value of the award and is recognized over the
service period, which is usually the vesting period. Pursuant to SFAS No. 123,
companies are encouraged, but are not required, to adopt the fair value method
of accounting for employee stock-based transactions. Companies are also
permitted to continue to account for such transactions under Accounting
Principals Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB Opinion No. 25") but are required to disclose in a note to the
consolidated financial statements pro forma net income and per share amounts as
if the Company had applied the new method of accounting. SFAS No. 123 also
requires increased disclosures for stock based compensation arrangements.

The Company has elected to comply with APB Opinion No. 25 and related
interpretations in accounting for its stock options because the alternate fair
value accounting provided for under SFAS No. 123 requires use of option
valuation models which were not developed for use in valuing employee stock
options. Under APB Opinion No. 25, because the exercise price of the Company's
employee stock options equals the market price of the underlying stock on the
date of grant, no compensation expense is recognized.







                                     F - 14

<PAGE>


                      Megadata Corporation and Subsidiaries

                   Notes to Consolidated Financial Statements

                                October 31, 2000

10. STOCK OPTIONS (CONTINUED)

In accordance with SFAS No. 123, pro forma information regarding net (loss) and
net (loss) per common share has been determined as if the Company had accounted
for its employee stock options under the fair value method of that Statement.
The fair value for these stock options was estimated at the date of grant, using
a Black Scholes option pricing model with the following weighted average
assumptions for 2000, 1999, and 1998, respectively: risk-free interest rates of
6.0% for fiscal 2000 and 5.0% for fiscal 1999 and 1998, no dividend yields on
the Common Stock, volatility factors of the expected market price of the
Company's Common Stock of 1.252 in fiscal 2000, 1.217 in fiscal 1999 and 1.029
in fiscal 1998, and a 10 year weighted average expected life of the options.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. In
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options due to changes in
subjective input assumptions which may materially affect the fair value
estimate, and because the Company's employee stock options have characteristics
significantly different from those of traded options. For purposes of pro forma
disclosure, the estimated fair value of the options is amortized to expense over
the options' vesting period. The Company's pro forma information is as follows:

                                                YEAR ENDED OCTOBER 31,
                                          2000        1999            1998
                                    --------------------------------------------

Pro forma net (loss)                  $(616,000)   (324,000)     $(  902,000)
                                    ============================================
Pro forma net (loss) per
     common share--basic and
     diluted                          $    (.21)   $   (.13)     $      (.36)
                                    ============================================








                                     F - 15


<PAGE>



                      Megadata Corporation and Subsidiaries

                   Notes to Consolidated Financial Statements

                                October 31, 2000

10. STOCK OPTIONS (CONTINUED)

Information with respect to options during the years ended December 31, 2000,
1999, and 1998 under SFAS No. 123 is as follows:
<TABLE>
<CAPTION>


                                               2000                       1999                1998
                                          ------------------------------------------------------------
                                                    WEIGHTED             WEIGHTED            WEIGHTED
                                                    AVERAGE              AVERAGE   OPTIONS   AVERAGE
                                          OPTIONS   EXERCISE  OPTIONS    EXERCISE            EXERCISE
                                                     PRICE                 PRICE              PRICE
                                          ------------------------------------------------------------
<S>                                      <C>        <C>     <C>        <C>       <C>       <C>
Options outstanding--beginning of year
                                          220,000    $  .20   52,500   $    .38  25,000    $   1.35
Incentive options granted                 472,500      1.11  167,500        .15  60,000         .38
Options canceled and expired              (75,000)     (.63)    --      --      (32,500)      (1.13)
                                         ----------------------------------------------------------
Options outstanding--
   end of year                            617,500    $ .85   220,000   $    .20  52,500    $    .38
                                         ==========================================================
Options exercisable at
   end of year                             52,500    $ .38    52,500   $    .38  52,500    $    .38
                                         ==========================================================

Weighted average fair value per share
   of options granted during the year
                                            $1.07           $    .14             $  .35
                                            =====           ========             ======

</TABLE>

<TABLE>
<CAPTION>
                                OPTIONS OUTSTANDING              OPTIONS EXERCISABLE
                         -----------------------------------------------------------
                                Weighted-Average
                                    Remaining                           Weighted-Average
                                 Contractual   Weighted-Average         Exercise Price
                                    Life       Exercise Price
   Range of
EXERCISE PRICES     SHARES                                  SHARES
-----------------------------------------------------------------------------------------
<S>                <C>            <C>              <C>      <C>             <C>
     $.15          167,500        8.4 years        $.15        -            $ -
     $.38           52,500        5.7 years         .38     52,500           .38
   $.81-$.84       265,000        9.8 years         .82        -              -
  $1.25-$1.50       82,500        9.6 years        1.48        -              -
     $2.75          50,000        9.4 years        2.75        -              -
                   --------                                 ------
                   617,500                                  52,500
                   ========                                 ======

</TABLE>




As of October 31, 2000, there are 802,500 shares of common stock reserved for
future issuance under the Company's stock option plan.


                                     F - 16

<PAGE>


                      Megadata Corporation and Subsidiaries

                   Notes to Consolidated Financial Statements

                                October 31, 2000

11. MAJOR CUSTOMERS

The Company sells its products and services primarily to airlines and their
affiliates and airports. The Company performs ongoing credit evaluations of its
customers and generally does not require collateral. Credit losses have
historically been immaterial.

During the year ended October 31, 2000, three customers accounted for
approximately 40%, 11%, and 11% of revenues. During the year ended October 31,
1999, three customers accounted for approximately 40%, 13%, and 13% of revenues.
During the year ended October 31, 1998, three customers accounted for 28%, 14%,
and 10% of revenues. The Company had export sales of approximately $708,075,
$46,000 and $93,000 in fiscal 2000, 1999, and 1998, respectively.

12. RELATED PARTY TRANSACTIONS

For the year ended October 31, 1998, the Company reimbursed Datatab, Inc., a
subsidiary of Data Probe, Inc., which is majority owned by the Company's former
president, $47,683 for services rendered to the Company by an employee of
Datatab, Inc.

Effective October 1998, the Company began leasing space from Field Point Capital
Management Company at $1,000 per month rent. For the years ended October 31,
2000 and 1999, the Company reimbursed Field Point Capital Management Company, a
company 100% owned by the Company's President, for services rendered in the
amount of $52,000 and $54,000, respectively.





                                     F - 17

<PAGE>


                      Megadata Corporation and Subsidiaries

                   Notes to Consolidated Financial Statements

                                October 31, 2000

13. ROYALTY AGREEMENT

The Company is a party to a license agreement whereby the Company is granted the
exclusive right and license worldwide to manufacture and sell PASSUR systems for
use with airline dispatch arrangements and in other aircraft flight tracking.
The Company is also granted an exclusive license to sell PASSUR systems for
noise applications in the United States. The Company pays a royalty based on the
number of PASSUR systems sold and/or installed and generating subscription
revenue subject to a minimum annual royalty of $50,000. This license agreement
is in effect until the date of expiration of the last PASSUR patent to expire.

During October 1999, the license agreement was amended primarily with respect to
when additional royalties would be payable by the Company for new installations
of Company owned systems assuming the minimum annual royalty payment required
has been earned. Under the Agreement, these additional royalties are payable
based only upon a percentage of the revenue received from each Company owned
installation.







                                     F - 18

<PAGE>


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.


          (a) Identification of Directors.

                                                     Director Position and
Name                            Age       Since      Offices With Company
-------------------------------------------------------------------------------

G.S. Beckwith Gilbert           58        1997        Chairman of the Board,
                                                      Chief Executive Officer,
                                                      and a Director

Richard R. Schilling, Jr.       75        1974        Director

Yitzhak N. Bachana              67        1976        Director

John R. Keller                  60        1997        Executive Vice President,
                                                      and a Director

Bruce N. Whitman                67        1997        Director

Paul L. Graziani                43        1997        Director

James T. Barry                  39        2000        Executive Vice President*
                                                      and a Director


Each director is elected to serve until the succeeding annual meeting of
shareholders and until his successor is duly elected and qualifies.

Pursuant to an agreement between Data Probe, Inc. and the Company, dated May 7,
1976, the President of Data Probe, Inc., Yitzhak N. Bachana, is to be nominated
as a management nominee for director.

*Effective January 26, 2001, the Company named James T. Barry as Chief Operating
Officer. Mr. Barry continues as Executive Vice President and Director.


<PAGE>


          (b) Identification of Executive Officers.


                                                 Officer Position and Offices
Name                         Age       Since     With Company
--------------------------------------------------------------------------------

G. S. Beckwith Gilbert       58        1998      Chairman of the Board, Chief
                                                 Executive Officer, and a
                                                 Director

John R. Keller               60        1970      Executive Vice President,
                                                 Secretary, Treasurer, and a
                                                 Director

Dr. James A. Cole            60        1988      Senior Vice President of
                                                 Research & Development

James T. Barry               39        1998      Executive Vice President,
                                                 Marketing*, and a Director

Herbert E. Shaver            46        1993      Vice President, Controller and
                                                 Assistant Secretary

Peggy A. Arnold              47        2000      Vice President and Chief
                                                 Financial Officer



Each officer is elected to serve at the discretion of the Board of Directors.

*Effectively January 26, 2001, the Company named James T. Barry as Chief
Operating Officer. Mr. Barry continues as Executive Vice President and Director.

          (c) Identification of Certain Significant Employees.


          None.

          (d)  Family  Relationship.


          None.

<PAGE>


          (e)  Business  Experience.


          The following sets forth the business experience during the past five
years of each director and executive officer;

<TABLE>

<S>                       <C>
G.S. Beckwith Gilbert     Mr.  Gilbert was elected  Chairman of the Board in 1997 and was elected to the
                          additional  post of Chief  Executive  Officer  in  October of 1998.
                          In  addition,  Mr.  Gilbert  has been  President  and  Chief  Executive
                          Officer of Field Point Capital  Management  Company,  a merchant banking firm,
                          since  1988.  He is a partner of Wolsey & Co., a merchant  banking  firm.  Mr.
                          Gilbert is also a Director and Chairman of the  Executive  Committee of DIANON
                          Systems, Inc., as well as a Director of Davidson Hubeny Brands.


Richard R. Schilling, Jr. Mr.  Schilling  is a member of the law firm of  Burns,  Kennedy,  Schilling  &
                          O'Shea, New York, New York.

Yitzhak N. Bachana        Mr.  Bachana was  President  and Chief  Executive  Officer of the Company from
                          1980 to  October 2,  1998.  Mr.  Bachana  is the  President,  Chief  Executive
                          Officer  and  majority  shareholder  of Data  Probe,  Inc.,  a New York  based
                          computer  service  bureau.  Mr.  Bachana is also  President  and a director of
                          Datatab,   Inc.  since  1983.   Data  Probe,   Inc.  and  Datatab,   Inc.  are
                          publicly-held corporations.

Bruce N. Whitman          Mr. Whitman has been  Executive Vice President and a Director of  FlightSafety
                          International  since  1962.  He is  also a  Director  of  FlightSafety  Boeing
                          Training International, Petroleum Helicopters, Inc., and Aviall, Inc.

Paul L. Graziani          Mr.  Graziani is the  President  and Chief  Executive  Officer of  Analytical
                          Graphics,  Inc., a leading producer of commercial  analysis  software for the
                          space industry.

Dr. James A. Cole         Dr.  Cole is a  Senior  Vice  President  and the  Director  of  Research  and
                          Development  of the  Company.  Dr. Cole earned a Ph.D.  in physics from Johns
                          Hopkins University in 1966.

John R. Keller            Mr.  Keller  has been  with  the  Company  since  its  inception  in 1967 and
                          currently serves as Executive Vice President of the Company.


<PAGE>



James T. Barry            Mr. Barry was named Chief Operating Officer of the Company on January 26, 2001.
                          Mr. Barry continues as Executive Vice President.  Mr. Barry has been a Vice
                          President since 1998 and was named Executive Vice President in  2000.
                          He is also a Vice  President  of  Field  Point  Capital
                          Management  Company.  From 1989 to 1998,  he was with DIANON  Systems,  Inc.,
                          most recently as Vice President of Marketing.


Herbert E. Shaver         Mr. Shaver was a consultant to the Company serving as Controller from September 1993
                          until September 1998 at which time he became an employee. Mr. Shaver was named
                          Assistant Secretary in 1999 and named Vice President in 2000. From 1973 until 1998,
                          Mr. Shaver was a Vice President and Controller of Datatab, Inc. From 1983 until
                          1998, was the Controller of Data Probe, Inc.

Peggy A. Arnold           Ms. Arnold was with AMR Corporation from 1989 to 1999, where she served as Vice
                          President Finance for Flagship Airlines and later Managing Director Finance for
                          Sabre's operations in Europe, the Middle East and Africa. Prior to that she was with
                          Singer and Xerox. She is also a Vice President of Field Point Capital.

</TABLE>

         (f) Involvement in Certain Legal Proceedings.


         The Company knows of no event which occurred during the past five years
and which is described in Item 401(f) of Regulation S-K relating to any director
or executive officer of the Company.


ITEM 11. EXECUTIVE COMPENSATION.


         The Company hereby incorporates by reference into this Item the
information contained under the heading "Executive Compensation" in the Proxy
Statement.


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


         The Company hereby incorporates by reference into this Item the
information contained under the heading "Security Ownership of Certain
Beneficial Owners and Management" in the 2001 Proxy Statement.



<PAGE>





ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.


         (a) Transactions with management and others.


         On June 30, 2000, G.S. Beckwith Gilbert, Chairman and Chief Executive
Officer of the Company converted certain promissory notes of the Company which
matured on that date into shares of common stock of the Company. The notes were
originally issued by the Company between November 1998 and August 1999 in
exchange for financing provided by Mr. Gilbert. Mr. Gilbert converted the full
principal amount of the two notes and part of the principal amounts of nine
other notes, together with interest accrued thereon (an aggregate amount of
$583,144, including accrued interest) into 466,515 shares of common stock of the
Company, at the conversion rate of $1.25 per share.

         On October 31, 2000, Mr. Gilbert exercised a warrant for 500,000 shares
of common stock of the Company (at the exercise price of $1.25 per share) in
exchange for cancellation of debt owed by the Company to Mr. Gilbert in the
amount of $625,000, which debt matured on October 31, 2000. The warrant was
originally issued to Mr. Gilbert by the Company in June 1997 as part of a
financing agreement with Mr. Gilbert.

         In fiscal 2000, Mr. Gilbert loaned the Company $1,000,000 in the
aggregate under promissory notes bearing interest at 9% per annum and maturing
at various dates from June 30, 2000 to December 31, 2001. The Company made
payments of principal during the fiscal year totaling $25,000 due to Mr.
Gilbert, and $1,175,000 in principal amounts due were exchanged for equity. As
of October 31, 2000, the total notes payable due to Mr. Gilbert totaled $950,000
and are secured by the Company's assets. Maturities of these notes payable for
the fiscal years ended October 31 are as follows: 2001 - $800,000 and 2002 -
$150,000.


         (b) Certain business relationships.


         None.

         (c) Indebtedness of management.


         None.

         (d) Transactions with promoters.

         Not applicable.


<PAGE>


                                     PART IV


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



         (a) 1.Financial Statements                         Page
         --------------------------                         ----


               Included in Part II of this report:

               Independent Auditors Report                   F-2

               Consolidated balance sheets as at
               October 31, 2000 and 1999                     F-3

               Consolidated statements of
               operations for the years ended
               October 31, 2000, 1999 and 1998               F-4

               Consolidated statements of
               stockholders' equity (deficit)
               for the years ended
               October 31, 2000, 1999, and 1998              F-5

               Consolidated statements of cash
               flows for the years  ended
               October 31, 2000, 1999 and 1998               F-6

               Notes to consolidated financial
               Statements                                    F-7

               Schedules for which provision is made in the applicable
               accounting regulation of the Securities and Exchange Commission
               are not required under the related instructions or are
               inapplicable, and therefore have been omitted.

              (b) Reports Filed On Form 8-K


               On June 30, 2000, the Company filed a Form 8-K under Item 5
               announcing G.S. Beckwith Gilbert's conversion of certain
               promissory notes of the Company into shares of common stock of
               the Company.

               On October 31, 2000, the Company filed a Form 8-K under Item 5
               announcing G.S. Beckwith Gilbert's exercise of a warrant for
               shares of common stock of the Company in exchange for
               cancellation of debt owed by the Company to Mr. Gilbert.


<PAGE>


                     (c) Exhibits


                    EXHIBITS
                    --------

             3.1    The Company's composite Certificate of Incorporation, dated
                    as of January 24, 1990, is incorporated by reference from
                    our 10-K report for the fiscal year ended October 31, 1989.

             3.2    The Company's By-laws, dated as of May 16, 1988, are
                    incorporated by reference from our 10-K report for the
                    fiscal year ended October 31, 1998.

             10.1   1988 Bonus Pool Plan, is incorporated by reference from our
                    10-K report for the fiscal year ended October 31, 1998.

             10.2   The Company's 1988 Stock Option Plan, is incorporated by
                    reference from our 10-K report for the fiscal year ended
                    October 31, 1998.

             10.3   The Company's 1999 Stock Incentive Plan is incorporated by
                    reference from our Schedule 14A dated June 23, 1999.

             10.4   Severance Agreement with Yitzhak N. Bachana effective
                    October 2, 1998 (incorporated by reference from a Form 8-K,
                    dated October 6, 1998).

             10.5   Letter of Agreement for employment services, dated December
                    28, 1999, between the Company and Ken J. McNamara is
                    incorporated by reference to Exhibit 10.5 to our report on
                    Form 10-K for the fiscal year ended October 31, 1999.

             16     Change in Certifying Accountant (incorporated by reference
                    from a Form 8-K/A, dated October 28, 1998).

             21     List of Subsidiaries (incorporated by reference from our
                    10-K report for the fiscal year ended October 31, 1981).



<PAGE>




                                   SIGNATURES


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


MEGADATA CORPORATION

DATED:  JANUARY 26, 2001.        By:       /s/ G. S. Beckwith Gilbert
                                           ------------------------------
                                           G. S. Beckwith Gilbert, Chairman
                                              and Chief Executive Officer


Pursuant to the requirements o Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Company and in
the capacities and on the date indicated:


DATED:  JANUARY 26, 2001.               /s/ G. S. Beckwith Gilbert
                                      ------------------------------
                                       G. S. Beckwith Gilbert, Chairman
                                          and Chief Executive Officer


DATED:  JANUARY 26, 2001.                 /s/ James T. Barry
                                        ------------------------------
                                          James T. Barry
                                          Chief Operating Officer,
                                          Executive Vice President, Director



DATED:  JANUARY 26, 2001.               /s/ Peggy A. Arnold
                                      ------------------------------
                                        Peggy A. Arnold
                                           Vice President and
                                           Chief Financial Officer


DATED:  JANUARY 26, 2001.               /s/ Herbert E. Shaver
                                      ------------------------------
                                        Herbert E. Shaver, Controller
                                           Vice President, Principal
                                           Accounting Officer, and
                                           Assistant Secretary


DATED:  JANUARY 26, 2001.               /s/ John R. Keller
                                      ------------------------------
                                        John R. Keller,
                                        Executive Vice President and Director


DATED:  JANUARY 26, 2001.               /s/ Richard R. Schilling, Jr.
                                      ------------------------------
                                        Richard R. Schilling, Jr., Director


<PAGE>




                             SIGNATURES (CONTINUED)



DATED:  JANUARY 26, 2001.               /s/ Yitzhak N. Bachana
                                        ------------------------------
                                          Yitzhak N. Bachana, Director


DATED:  JANUARY 26, 2001.                 /s/ Bruce A. Whitman
                                        ------------------------------
                                          Bruce A. Whitman, Director


DATED:  JANUARY 26, 2001.                 /s/ Paul L. Graziani
                                        ------------------------------
                                          Paul L. Graziani, Director